Broadcom revenue miss stuns Wall Street, and its stock sinks after-hours

Broadcom Inc.’s stock fell sharply in after-hours trading after the chipmaker reported weaker-than-expected second-quarter revenue of $22.19 billion, below the $22.27 billion analysts had forecasted. While earnings before costs reached $2.44 per share, surpassing the $2.40 estimate, the revenue miss marked Broadcom’s first shortfall since December 2024, surprising Wall Street after a streak of strong quarters driven by AI chip demand. The company’s net income rose to $9.31 billion, up from $4.96 billion a year earlier, but investors focused on the revenue shortfall, pushing shares down nearly 14%. Despite the dip, Broadcom’s stock remains up 38% year-to-date, outperforming the Nasdaq’s 16% gain, thanks to explosive growth in AI-related sales. Broadcom remains a key player in the AI chip market, supplying custom processors to major clients like Anthropic, OpenAI, Google, and Meta. CEO Hock Tan confirmed six customers for custom chips, with AI revenue more than doubling year-over-year to $10.8 billion. However, he declined to raise the full-year AI revenue guidance above $100 billion, disappointing investors who had expected a higher target. For the current quarter, Broadcom forecasted sales of around $29.4 billion, above the $28.53 billion consensus estimate. Tan also noted the company will shift to selling chips alone in some cases, rather than full AI systems, a strategic change that could impact future revenue streams. The revenue miss came despite strong AI demand, with sales expected to grow to $16 billion in the current quarter. Broadcom’s AI chip business has surged due to its intellectual property and expertise in semiconductor design, making it a critical supplier for companies looking to reduce reliance on Nvidia’s GPUs.