Chipmaker and infrastructure software provider Broadcom late Thursday edged above Wall Street's targets for its fiscal third quarter, but it guided a tad below views for sales in the current period. AVGO stock fell in extended trading.
The Palo Alto, Calif.-based company earned an adjusted $1.24 a share on sales of $13.07 billion in the quarter ended Aug. 4. Analysts polled by FactSet had expected Broadcom to earn an adjusted $1.22 a share on sales of $12.98 billion. On a year-over-year basis, Broadcom earnings rose 18% while sales jumped 47%.
Broadcom's revenue growth benefited from its acquisition of VMware in November 2023.
For the current quarter, Broadcom said it expects sales of "approximately" $14 billion. Analysts were modeling $14.11 billion for the fiscal fourth quarter.
AVGO Stock Falls After Broadcom Reports Earnings
In after-hours trading on the stock market today, AVGO stock dropped 4.8% to 145.55. During the regular session Thursday, AVGO stock sank 0.8% to close at 152.82.
"Broadcom's third-quarter results reflect continued strength in our AI semiconductor solutions and VMware," Chief Executive Hock Tan said in a news release. "We expect revenue from AI to be $12 billion for fiscal year 2024 driven by Ethernet networking and custom accelerators for AI data centers."
Broadcom's new target of $12 billion in AI chip revenue is an increase from its prior goal last quarter of more than $11 billion this year.
Broadcom is making application-specific integrated circuits, or ASICs, for AI purposes for five customers, according to JPMorgan. They include Alphabet's Google, Meta Platforms, TikTok parent ByteDance, OpenAI and an unidentified customer.
Chief Financial Officer Kirsten Spears said Broadcom's revenue excluding VMware grew 4% year over year in fiscal Q3.
AVGO stock is on the IBD Tech Leaders list.
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