Broadcom shares wavered in extended trading following third-quarter results that showed an 86% revenue increase to $29.6 billion. Despite topping Wall Street estimates and raising its fiscal 2027 AI chip revenue forecast to about $115 billion, analysts noted the beat was not enough to satisfy sky-high market expectations.
Third-Quarter Financial Performance and Earnings Details
Broadcom reported quarterly revenue of $29.6 billion, marking an 86% increase year over year that surpassed Wall Street expectations of $29.45 billion. Adjusted earnings per share reached $3.32, coming in above analyst consensus estimates of $3.23. The company’s performance was propelled largely by its semiconductor division, where third-quarter artificial intelligence revenue surged to $16.7 billion.
That figure represents a 221% jump compared to the same period last year and a 54% increase from the previous quarter. Broadcom’s total revenue figures slightly exceeded estimates of $29.36 billion, while adjusted profit outperformed expectations of $3.24 per share.
Market Reaction and Analyst Perspectives on the Results
Despite the robust top-line growth and earnings beat, Broadcom stock initially tumbled as much as 4% in after-hours trading before trimming those losses. Shares of the Palo Alto, California-based company traded down over 1% in extended sessions, reflecting investor hesitation despite soaring demand.
According to StoneX financial equity research analyst Cody Acree, the strong print simply failed to bridge the gap with elevated market pricing. I can understand the selling pressure,
Cody Acree, StoneX financial equity research analyst, told Yahoo Finance. The analyst, who has a Buy rating on the stock, noted the chipmaker’s fiscal Q3 revenue and earnings beat was not enough to keep investors happy.
The magnitude is not quite enough from a top and bottom line standpoint on the beat and raise when you have a company that is this levered to AI,
said Acree.
Year-to-date, Broadcom shares have climbed roughly 6%, significantly underperforming rivals and the broader semiconductor index as AI spending concerns and increased competition persist, including Marvell’s recent custom chip deal with Google. Broadcom is really just second only to Nvidia as far as its ecosystem across the data center,
said Acree. It's just a matter of when do you enter and when do you trade around a position.
Upgraded Fiscal Forecasts and Multi-Year AI Bookings
Looking ahead, Broadcom revised its long-term outlook upward, lifting its fiscal 2027 AI chip revenue forecast to approximately $115 billion, up from a prior forecast of over $100 billion. The company expects that to double to roughly $230 billion in fiscal 2028.
CEO Hock Tan emphasized the strength of incoming orders during discussions with analysts, noting that bookings for Broadcom’s AI chips topped $30 billion last quarter alone. Demand for our custom AI accelerators and networking continues to be very strong,
CEO Hock Tan said in the company’s earnings release.
That is committed capacity, not aspiration, and it closes most of the gap to what the market wanted,
said Patrick Moorhead, CEO of analyst firm Moor Insights & Strategy.
Visibility Into Major Tech Deployment Plans
CEO Hock Tan told analysts the company has visibility into additional AI infrastructure deployments through 2028, including more than 10 gigawatts for Anthropic, over 5 GW for OpenAI and 3 GW for Meta.
Broadcom’s custom AI chips are used by companies including Meta Platforms, Alphabet’s Google and OpenAI. These custom silicon components and networking components tie AI systems together, positioning Broadcom to benefit as Big Tech races to build AI infrastructure and spending broadens beyond Nvidia’s costly processors.
Current-Quarter Revenue Guidance and Near-Term Outlook
The company said it expects revenue of $34.8 billion for its current quarter, below the $35.05 billion consensus expected by analysts, according to Bloomberg data. Fourth-quarter revenue is expected to be about $34.8 billion, below analysts’ average estimate of $35.03 billion, according to data compiled by LSEG. That guidance contributed to the cautious immediate reaction across public markets as shares sat at USD 367.24, down 2.44 (-0.66%) at close on September 2 at 4:00:01 p.m. EDT.
As technology giants continue writing substantial checks for custom AI hardware and networking integration, investors and analysts will continue to scrutinize returns on massive spending against persistent industry competition.
