Broadcom beats estimates but stock dips after-hours
However, analysts expect Broadcom’s AI and custom chip momentum to continue into fiscal 2026.
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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