Broadcom forecasts quarterly sales below estimates amid rising custom AI chip competition

Broadcom exceeded Wall Street's expectations in its fiscal third quarter, reporting adjusted earnings of $3.32 per share on revenue of $29.59 billion, surpassing forecasts of $3.21 per share and $29.25 billion. The company's semiconductor and software sales grew 86% year-over-year, driven by a substantial surge in demand for artificial-intelligence chips.

Free cash flow reached a record $13.7 billion. Following the report, Broadcom's shares rose slightly in after-hours trading to $368.01, up 0.21% from the regular-session close of $367.47. The company forecasted $34.8 billion in revenue for the fiscal fourth quarter and expects AI semiconductor revenue of $115 billion in fiscal 2027.

Broadcom's strong third quarter highlights its growing reliance on AI infrastructure, with semiconductor solutions revenue increasing 127% from a year earlier and AI semiconductor revenue surging 221%. Infrastructure software revenue expanded by 29%. The company's net income rose 96% year-over-year to $20.1 billion, with operating margin expanding to 67.9%.

Broadcom's results underscore a broader industry trend, where a few large technology firms are heavily investing in custom AI accelerators and networking gear.