Broadcom Shares Drop on Weak Guidance Despite Record AI Revenue Growth
Semiconductor stocks had mixed reactions following Broadcom’s fiscal third-quarter earnings report. While the company reported a record $16.7 billion in AI semiconductor revenue, up 221% year-over-year and now accounting for 56% of total sales, its shares fell by 6%. The decline was driven by weaker-than-expected guidance for current-quarter revenue at $34.8 billion versus the consensus estimate of $35.05 billion. Broadcom also guided to a gross margin contraction in Q4 to 73%, down from 78% a year ago, due to increasing custom accelerator and high-bandwidth memory content as a share of revenue. This shift is diluting profit margins despite strong top-line growth. In contrast, NVIDIA shares rose slightly by 1%, with the report confirming robust AI demand through Broadcom’s $350 billion two-year hyperscaler contract. Advanced Micro Devices (AMD) and Marvell Technology also saw declines as investors worried about similar margin pressures in custom silicon segments.
Tickers: $AMD $AVGO $MRVL $NVDA
Topics: AI revenue growth semiconductors stock price reaction