Broadcom delivered explosive AI-driven growth in its fiscal third quarter but still saw its stock slide after the results, as investors judged the outlook insufficiently spectacular relative to elevated expectations.
Revenue rose 86% year over year to $29.59 billion, ahead of Wall Street expectations. Adjusted earnings were $3.32 per share. AI semiconductor revenue surged 221% to $16.7 billion, and semiconductor revenue reached $20.84 billion, meaning AI chips and networking now account for more than half of company sales.
CEO Hock Tan raised long-term AI revenue targets: about $115 billion in fiscal 2027, up from previous guidance of more than $100 billion, and roughly $230 billion in fiscal 2028. For the fourth quarter, Broadcom expects AI semiconductor revenue of $21.7 billion, up 236% year over year.
Despite those figures, AVGO closed Wednesday at $367.24, down 0.66%, then slipped further in after-hours trading, with some reports noting a more than 5% decline before recovering ground. The company's fourth-quarter revenue guidance of about $34.8 billion was slightly below the $35.03 billion average analyst estimate from LSEG.
StoneX analyst Cody Acree said the results were not enough to keep investors happy, citing the outsized beats and raises Nvidia has delivered. Morgan Stanley had warned that the main risk was expectations rather than fundamentals and modelled roughly $120 billion of fiscal 2027 AI revenue, while some investors had moved above $150 billion.
Competition remains a concern: Google has expanded work with Marvell in custom silicon, while JPMorgan analyst Harlan Sur argued concerns about Broadcom's Google position were overstated. BMO analyst Harsh Kumar ranked Broadcom behind only Nvidia among AI-chip suppliers. Broadcom also reported infrastructure software revenue of $8.75 billion and quarterly free cash flow of $13.7 billion, while AI chip bookings topped $30 billion.
For crypto markets, the report has no direct asset-level impact, but it highlights the broader AI infrastructure investment cycle that can influence sentiment around AI-related technology narratives.
