Chipmaker and infrastructure software supplier Broadcom (AVGO) came in slightly above Wall Street’s fiscal third-quarter targets Thursday night, but it gave little indication of selling in the current period. AVGO shares fell in extended trading.
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The Palo Alto, Calif.-based company earned an adjusted $1.24 per share on revenue of $13.07 billion in the quarter ended Aug. 4. Analysts polled by FactSet had expected Broadcom to earn an adjusted $1.22 per share on revenue of $12.98 billion. On a year-over-year basis, Broadcom’s profit rose 18% while revenue rose 47%.
Broadcom’s revenue growth benefited from the acquisition of VMware in November 2023.
For the current quarter, Broadcom expects revenue of “approximately” $14 billion. Analysts had modeled $14.11 billion for the fiscal fourth quarter.
AVGO shares drop after Broadcom reports earnings
In after-hours trading today, AVGO shares fell 4.8% to 145.55. During Thursday’s regular session, AVGO shares fell 0.8% to close at 152.82.
“Broadcom’s third-quarter results reflect the continued strength of our AI semiconductor solutions and VMware,” Chief Executive Hock Tan said in a press release. “We expect AI revenues to reach $12 billion for fiscal year 2024, driven by Ethernet networking and custom accelerators for AI data centers.”
Broadcom’s new target of $12 billion in AI chip revenue is up from its previous target last quarter, which was more than $11 billion this year.
Broadcom is making application-specific integrated circuits, or ASICs, for AI purposes for five customers, according to JPMorgan. They include Alphabet‘s (GOOGL) Google, Meta platforms (META), TikTok parent company ByteDance, OpenAI and an undisclosed customer.
Chief Financial Officer Kirsten Spears said Broadcom’s revenue (excluding VMware) rose 4% year over year in the third fiscal quarter.
AVGO stock is on IBD Tech Leaders list.
Follow Patrick Seitz on X, formerly Twitter, at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
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