AVGO Stock: Broadcom Beats Third-Quarter Targets, But Outlook Disappoints

Chipmaker and supplier of infrastructure software Broadcom (AVGO) came in above Wall Street’s targets for the fiscal third quarter late Thursday, but was slightly below expectations for current-period sales. AVGO stock fell in extended trading.

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The Palo Alto, California-based company earned an adjusted $1.24 per share on revenue of $13.07 billion in the quarter ended Aug. 4. Analysts polled by FactSet had expected Broadcom to earn an adjusted $1.22 per share on revenue of $12.98 billion. On a year-over-year basis, Broadcom’s revenue rose 18%, while revenue rose 47%.

Broadcom’s revenue growth benefited from the November 2023 acquisition of VMware.

For the current quarter, Broadcom expects revenue of “approximately” $14 billion. Analysts expected $14.11 billion for the fiscal fourth quarter.

AVGO shares fall after Broadcom reports earnings

During after-hours trading on the stock market today, AVGO shares fell 4.8% to 145.55. During the regular session Thursday, AVGO stock fell 0.8% to close at 152.82.

“Broadcom’s third quarter results reflect the continued strength of our AI semiconductor solutions and VMware,” CEO Hock Tan said in a press release. press release. “We expect AI revenue to reach $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 revenue from AI chips is an increase from the previous target last quarter of more than $11 billion this year.

According to JPMorgan, Broadcom is making application-specific integrated circuits (ASICs) for AI purposes for five customers. They include Alphabet‘s (GOOGL) Googling, Metaplatforms (META), TikTok parent ByteDance, OpenAI and an unknown customer.

Chief Financial Officer Kirsten Spears said Broadcom’s revenue, excluding VMware, grew 4% year over year in the third quarter.

AVGO stock is on the IBD Tech Leaders list.

Follow Patrick Seitz on X, formerly Twitter, at @IBD_PSeitz for more stories on consumer tech, software and semiconductor stocks.

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