Broadcom shares fall 3% after revenue forecast misses estimates

Investing.com -- Broadcom shares fell about 3% in extended trading on Wednesday after the chipmaker forecast fourth-quarter revenue below Wall Street estimates, raising concerns that intensifying competition in custom artificial intelligence processors could limit growth.

The company expects fourth-quarter revenue of about $34.8 billion, below analysts’ average estimate of $35.03 billion. Broadcom also forecast fourth-quarter AI chip sales of $21.7 billion, slightly above analysts’ estimate of $21.33 billion, highlighting continued strength in its AI business.

Shares of the Palo Alto, California-based chipmaker fell more than 3% in extended trading. The stock has gained about 6% this year, trailing both major semiconductor peers and the broader chip index.

Broadcom’s custom-chip business faces growing competition as major technology companies seek alternatives to Nvidia’s dominant AI processors. Marvell, for example, struck a custom-chip agreement with Google last month that could generate up to $120 billion in revenue through fiscal 2033, while potentially making Google one of Marvell’s largest investors through a stake of as much as $12.2 billion.

Broadcom has also been working to expand its manufacturing capacity and reduce dependence on individual suppliers as AI demand strains the semiconductor supply chain. In July, the company signed a multi-year memorandum of understanding with Samsung Electronics as part of those efforts.

For the third quarter, AI chip sales more than tripled to $16.7 billion, helping lift total revenue to $29.59 billion. Adjusted earnings were $3.32 per share, compared with analysts’ estimate of $3.21 per share. Revenue also exceeded the $29.25 billion consensus estimate.

The results underscore the strength of Broadcom’s AI franchise, but the weaker-than-expected revenue outlook suggests investors are increasingly focused on whether the company can sustain rapid growth as hyperscalers diversify their custom-chip suppliers.

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