June 3 (Reuters) – Broadcom forecast third-quarter revenue above Wall Street expectations on Wednesday, betting on robust demand for its custom AI chips and networking gear.
However, shares of the Palo Alto, California-based company fell more than 2% in extended trading. They had gained nearly 8% last week in the run up to earnings.
Broadcom has cemented its position as a key beneficiary of the AI race, developing custom chips for hyperscalers such as Meta and Alphabet’s Google as an alternative to the pricey, power-hungry Nvidia processors that dominate the market.
As the AI industry evolves rapidly, machine learning capabilities and requirements vary greatly from company to company, resulting in large cloud companies building their own processors to slash costs and personalize workloads.
Revenue is expected to the third quarter, compared with analysts’ average estimate of $28.54 billion, according to data compiled by LSEG.
“In Q3 we expect semiconductor revenue from AI to grow over 200 percent year-over-year to $16.0 billion,” CEO Hock Tan Said.
In the second quarter, revenue rose 48% to $22.19 billion, slightly missing estimates of $22.27 billion. Adjusted profit came in at $2.44 per share, trailing estimates of $2.40.
(Reporting by Anhata Rooprai in Bengaluru; Editing by Arun Koyyur)
