Broadcom beats estimates but stock dips after-hours

However, analysts expect Broadcom’s AI and custom chip momentum to continue into fiscal 2026.

Broadcom unveils the Tomahawk Ultra networking chip, promising faster AI data centre performance by connecting four times more processors than Nvidia’s competing system.

Broadcom reported strong second-quarter earnings and revenue driven by robust AI demand and solid networking performance.

Despite beating expectations and raising its outlook, the stock fell 3.47% in after-hours trading on Thursday — likely due to profit-taking instead of concern about fundamentals. Shares had previously rallied over 75% since April.

Revenue for the quarter ending May 5 reached US$15 billion, up 20% year-on-year. Adjusted earnings per share were US$1.58, exceeding estimates by two cents.

Net income more than doubled to US$4.97 billion. CEO Hock Tan attributed the strength to growing demand for AI infrastructure and contributions from VMware, which Broadcom acquired in late 2023.

Broadcom forecasted Q3 revenue of approximately US$15.8 billion, slightly above analyst expectations. AI-related revenue is set to increase to US$5.1 billion, up from US$4.4 billion in Q2, fuelled by custom AI accelerators and high-speed networking chips used in hyperscale data centres.

Tan said that the trend should continue through fiscal 2026.

Semiconductor solutions brought in US$8.4 billion in Q2, up 17% from last year, while software revenue rose 25% to US$6.6 billion, with VMware as a key contributor.

About 30% of Broadcom’s AI-related revenue now comes from its switching business, reflecting increasing demand for AI chip clusters. Despite the slight dip in share price, analysts continue to view Broadcom as a key player in AI infrastructure.

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