Broadcom boosts AI revenue outlook, but stock falls after mixed earnings

By Emily Bary

While Broadcom beats on infrastructure solutions revenue in the latest quarter, it misses in semiconductor solutions and comes up short on its overall revenue outlook for the current quarter

Broadcom Inc. now expects $12 billion in artificial-intelligence revenue this year, but that increased forecast wasn't enough to send shares higher in Thursday's late trading.

Shares slid 6.7% in the extended session after Broadcom's (AVGO) overall revenue forecast for the current quarter came up a hair shy.

Broadcom's prior outlook for AI revenue was for upwards of $11 billion.

The AI growth is expected to be driven by ethernet networking and custom accelerators for AI data centers, Chief Executive Hock Tan said in a release.

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Overall, Broadcom reported $13.07 billion in revenue for the fiscal third quarter, up 47% from a year before when factoring in contributions from the VMware deal that closed in November. Excluding Broadcom, revenue grew 4%. Analysts tracked by FactSet had been expecting $12.98 billion.

"The transformation of VMware continues to progress very well," Tan said.

In the most recent quarter, Broadcom generated $7.27 billion in revenue from semiconductor solutions, up 5% from a year before, while the FactSet consensus was for $7.42 billion. Infrastructure-solutions revenue, which benefited from the VMware deal, brought in $5.80 billion in revenue, up 200% and above the FactSet consensus of $5.52 billion.

The semiconductor and software company logged a net loss of $1.88 billion, or 40 cents a share, compared with $3.30 billion, or 77 cents a share, in the year-before quarter. On an adjusted basis, Broadcom earned $1.24 a share, while analysts were looking for $1.22 a share.

Broadcom expects about $14 billion in revenue for its fiscal fourth quarter, which is below the consensus view calling for $14.1 billion. The company also anticipates that adjusted earnings before interest, taxes, depreciation and amortization for the full year will be 64% of revenue.

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-Emily Bary

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09-05-24 2145ET

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