Broadcom Shares Slide Over 9% After Underwhelming Sales Guidance Despite AI Growth

Shares of Broadcom (NASDAQ:AVGO) dropped over 9% intra-day today trading after the chipmaker's forecast for fourth-quarter revenue slightly missed market expectations. The company projected $14 billion in sales for the upcoming quarter, just under the $14.04 billion analysts had anticipated.

For the third quarter, Broadcom reported adjusted earnings per share of $1.24 on revenue of $13.07 billion, surpassing analyst forecasts of $1.21 EPS and $12.97 billion in revenue.

However, Broadcom’s broadband division remained a weak spot, with revenue in the segment plummeting by 49% in Q3. CEO Hock Tan attributed this to a continued pause in spending from telecommunications and service providers, noting that broadband sales are expected to remain down over 40% year-over-year in the fourth quarter, with recovery anticipated in 2025.

Despite the broadband challenges, Broadcom’s AI-optimized chips continued to show strong demand. The company raised its full-year sales outlook for AI components to $12 billion, up from a previous estimate of over $11 billion. In Q3, AI revenue was around $3.1 billion, with Tan saying AI sales were "in line" with expectations.

While no specific guidance was provided for AI revenue in fiscal 2025, Tan noted that the company expects AI demand to remain strong.