(Reuters) – Chipmaker Broadcom on Thursday forecast fourth-quarter revenue would come in slightly below Wall Street expectations, due to disappointing broadband spending.
Despite a surge in orders for its artificial intelligence chips, shares fell nearly 5% in extended trading.
The Irvine, California-based company expects revenue of about $14 billion, while analysts polled by LSEG expected revenue of $14.04 billion.
Investor expectations for artificial intelligence (AI) companies remain high as they trust that AI chips and technology will drive significant growth.
Broadcom reported third-quarter revenue of $13.07 billion, beating estimates of $12.97 billion, according to data from LSEG.
However, the company reported a loss of $1.88 billion on a GAAP basis, compared to a profit of $3.30 billion a year ago.
The net loss includes a one-time, discrete, non-cash tax provision of $4.5 billion, resulting from an intragroup transfer of certain intellectual property rights to the United States as part of a supply chain restructuring.
The company raised its annual AI revenue forecast to $12 billion from $11 billion, higher than its previous guidance, as it benefits from strong demand for its custom chips.
Broadcom’s custom chips, which are used to move large amounts of data, have led to a surge in orders from companies looking to streamline their data processing.
The company’s third-quarter revenue for its semiconductor solutions segment, which includes networking and custom chips, was $7.27 billion, compared to analysts’ expectations of $7.39 billion.
AI chip leader Nvidia’s quarterly earnings report fell short of investors’ sky-high expectations last week, as the company failed to beat Wall Street’s targets by a wide margin.
(Reporting by Zaheer Kachwala in Bengaluru; Editing by Tasim Zahid)
