Chip maker and infrastructure software provider Broadcom (AVGO) narrowly beat Wall Street targets for its fiscal third quarter on Thursday but came in a bit short of sales forecasts for the current period. AVGO shares fell in after-hours trading.
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The Palo Alto, California-based company earned an adjusted $1.24 per share on sales 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 sales of $12.98 billion. On a year-over-year basis, Broadcom's earnings rose 18%, while sales rose 47%.
Broadcom's revenue growth benefited from its acquisition of VMware in November 2023.
For the current quarter, Broadcom said it expects sales of “approximately” $14 billion. Analysts had forecast $14.11 billion for the fiscal fourth quarter.
AVGO shares fall after Broadcom announces its results
In after-hours trading on the stock market today, AVGO shares fell 4.8% to 145.55. During Thursday's regular session, AVGO shares fell 0.8% to close at 152.82.
“Broadcom's third quarter results reflect the continued strength of our AI and VMware semiconductor solutions,” CEO Hock Tan said in a statement. press release“We expect AI revenue to reach $12 billion by fiscal year 2024, driven by Ethernet networking and custom accelerators for AI data centers.”
Broadcom's new target of $12 billion in AI chip revenue is up from its previous target last quarter of more than $11 billion this year.
According to JPMorgan, Broadcom is manufacturing application-specific integrated circuits (ASICs) for artificial intelligence purposes for five customers. These include: Alphabet's (GOOGL) Google, Target platforms (GOAL), TikTok's parent company, ByteDance, OpenAI, and an unnamed customer.
Chief Financial Officer Kirsten Spears said Broadcom's revenue, excluding VMware, grew 4% year over year in the fiscal third quarter.
AVGO stock is on IBD's Technology Leaders list.
Follow Patrick Seitz on X, formerly Twitter, at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
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