Updated 2 min read
What happened: Broadcom (AVGO) stock declined 15% in premarket trading on Thursday after the custom chip designer’s AI sales outlook missed estimates.
By the numbers: The company reported revenue of $22.19 billion, modestly exceeding the consensus estimate of $22.13 billion, although some analysts had anticipated an even stronger result. Earnings per share came in at $2.44, topping estimates of $2.39.
The company said it expects revenue for the current quarter to be $29.4 billion, compared with a consensus estimate of $28.61 billion.
Semiconductor revenue from artificial intelligence in the second quarter grew 143% year over year. However, AI chip sales for the third quarter were projected at $16 billion, below analysts’ estimates of $17.2 billion.
Additionally, the company did not raise its AI semiconductor sales forecast for 2026.
“We expect this momentum to continue into fiscal year 2027 and reiterate our AI semiconductor revenue guidance to be in excess of $100 billion,” CEO Hock Tan said during the company’s earnings call.
What else you should know: Shares of the chip designer had been on a tear over the past five sessions, hitting multiple all-time highs as investors priced in solid results.
“The bar was really high going into the print here, and I think part of the response you’re seeing here from the shares kind of points to that,” CFRA Research senior vice president Angelo Zino told Yahoo Finance on Wednesday as the stock was falling in after-hours.
Semiconductor stocks have led the broader market rally to all-time highs this year amid an AI data center boom and infrastructure build-out.
Broadcom is expected to benefit from hyperscaler artificial intelligence spending this year, which is estimated to reach $650 billion. The company’s customers include Google (GOOG, GOOGL), Meta (META), and AI developers Anthropic (ANTH.PVT) and OpenAI (OPAI.PVT).
Ines Ferre is a senior business reporter for Yahoo Finance. Follow her on X at @ines_ferre.
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