Broadcom stock drops on Q4 guidance miss even as AI semiconductor revenue triples

Yahoo Finance ·

Proactive financial news and online broadcast teams provide fast, accessible, informative and actionable business and finance news content to a global investment audience. All our content is produced independently by our experienced and qualified teams of news journalists. Proactive news team spans the world’s key finance and investing hubs with bureaus and studios in London, New York, Toronto, Vancouver, Sydney and Perth. We are experts in medium and small-cap markets, we also keep our community up to date with blue-chip companies, commodities and broader investment stories. This is content that excites and engages motivated private investors. The team delivers news and unique insights across the market including but not confined to: biotech and pharma, mining and natural resources, battery metals, oil and gas, crypto and emerging digital and EV technologies. Proactive has always been a forward looking and enthusiastic technology adopter. Our human content creators are equipped with many decades of valuable expertise and experience. The team also has access to and use technologies to assist and enhance workflows. Proactive will on occasion use automation and software tools, including generative AI. Nevertheless, all content published by Proactive is edited and authored by humans, in line with best practice in regard to content production and search engine optimisation. Broadcom Inc (NASDAQ:AVGO, XETRA:1YD) shares fell more than 6% after the company's fiscal fourth-quarter revenue guidance fell short of Wall Street expectations, overshadowing a third-quarter earnings beat driven by surging demand for its custom AI chips. The company guided to fourth-quarter revenue of approximately $34.8 billion, below the $35.03 billion analysts had projected, sending shares lower despite otherwise strong results. Broadcom posted third-quarter revenue of $29.6 billion, up 86% year-over-year and ahead of the $29.36 billion analysts had expected. Adjusted earnings per share came in at $3.32, above estimates of $3.24 and up 96% from a year earlier. AI semiconductor revenue reached $16.7 billion, a 221% jump from the prior year. Non-GAAP operating income totaled $20.1 billion, up 92% year-over-year and above the $19.73 billion estimate. For the fourth quarter, the company expects non-GAAP operating income to be around 66% of projected revenue, with AI semiconductor revenue forecast at $21.7 billion. By segment, Semiconductor Solutions generated net revenue of $20.8 billion, up 127% year-over-year, while Infrastructure Software brought in $8.8 billion, up 29%. "Demand for our custom AI accelerators and networking continues to be very strong. Q3 AI semiconductor revenue of $16.7 billion grew 221% year-over-year, and 54% quarter-over-quarter," said Hock Tan, CEO of Broadcom. Free cash flow for the quarter was $13.7 billion, up 95% year-over-year and roughly in line with the $13.76 billion estimate. Cash flow from operations rose 98% to $14.2 billion.

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