Broadcom AI Revenue Jumps 143% as Shares Drop 13%
SkimNews Take
The market's immediate focus on future AI chip sales and software performance, despite strong overall results, suggests investors are prioritizing forward-looking segment growth over current broad financial health.
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- Broadcom posted fiscal Q2 adjusted earnings of $2.44 per share and revenue of $22.19 billion, up 48% YoY and beating Wall Street expectations.
- Broadcom saw AI semiconductor revenue surge 143% to $10.8 billion in Q2, and projects Q3 AI revenue to exceed $16 billion (over 200% YoY growth).
- Broadcom forecast Q3 total revenue of about $29.4 billion, above analysts’ $28.25 billion estimate, but its stock fell 13% to $418.91 after the guidance.
- Hock Tan warned that Google (Alphabet) may diversify its custom‑chip supply chain and that the rapid AI‑semiconductor growth would dilute Broadcom’s gross margin.
- Broadcom aims to reach $100 billion in AI chip sales by 2027 and currently designs custom chips for six clients, including Alphabet and OpenAI.
- Broadcom’s software segment, which accounted for 42% of revenue last year, is expected to fall to 20% of revenue next year, with software revenue growth projected at about 11% in Q2.
Why it matters: Shareholders lose as the stock slides 13% despite a 48% revenue jump, while AI chip customers like Google benefit from Broadcom’s expanding custom‑chip supply; the margin‑dilution warning signals tighter profitability for the semiconductor giant. Broadcom’s $100 billion AI‑chip sales target by 2027 highlights long‑term upside, yet the near‑term decline reflects investor caution over margin pressure and supply‑chain diversification.
