“Broadcom Stock Drops 9% on Disappointing Sales Forecast Despite AI Growth”
Source: Davit Kirakosyan
Broadcom (NASDAQ:AVGO) witnessed a 9% dip in intra-day shares following a fourth-quarter revenue forecast that fell slightly below market projections. The tech giant estimated $14 billion in sales for the upcoming quarter, just shy of the $14.04 billion anticipated by analysts.
In the third quarter, Broadcom outperformed expectations with adjusted earnings per share of $1.24 on $13.07 billion in revenue, exceeding analyst forecasts of $1.21 EPS and $12.97 billion in revenue.
Despite facing challenges in its broadband division, which saw revenue drop by 49% in Q3 due to reduced spending from telecom and service providers, CEO Hock Tan is optimistic about the future. He expects broadband sales to decline by over 40% in Q4 but anticipates a recovery by 2025.
On the bright side, Broadcom’s AI-optimized chips are experiencing high demand. The company raised its full-year sales estimate for AI components to $12 billion, up from the previous projection of $11 billion. In Q3, AI revenue stood at approximately $3.1 billion, meeting expectations.
Although there is no concrete guidance for AI revenue in 2025, Tan emphasized strong ongoing demand for AI products. This indicates a positive outlook for Broadcom’s future in the AI market segment.