Broadcom forecasts quarterly sales below estimates amid rising custom AI chip competition
· CNA · JoinRead a summary of this article on FAST.
Get bite-sized news via a new
cards interface. Give it a try.
Click here to return to FAST Tap here to return to FAST
FAST
Sept 2 : Broadcom forecast quarterly revenue below Wall Street estimates on Wednesday, signaling intense competition could hamper gains from its custom processors.
Shares of the Palo Alto, California-based company fell over 3 per cent in extended trading. They have gained about 6 per cent this year, significantly underperforming rivals and the broader semiconductor index.
While Broadcom is a key player in the chip sector, it lags behind AI bellwether Nvidia, whose dominant graphics processors remain the industry standard for AI workloads.
The company expects fourth-quarter revenue of about $34.8 billion, compared with analysts' average estimate of $35.03 billion, according to data compiled by LSEG.
CNA Games
Guess Word
Crack the word, one row at a time
Buzzword
Create words using the given letters
Mini Sudoku
Tiny puzzle, mighty brain teaser
Mini Crossword
Small grid, big challenge
Word Search
Spot as many words as you can
Show More
Show Less
Finance chief Amie Thuener said the company expects to maintain its adjusted operating margin at 66 per cent for the fourth quarter, flat from a year ago.
Broadcom also said it expects AI chip sales of $21.7 billion in the fourth quarter, slightly above estimates of $21.33 billion, according to analysts polled by Visible Alpha.
The company's customers are also signing deals with rival firms. Last month, Marvell struck a custom chip deal with Google that could make the search giant one of its biggest investors with an up to $12.2 billion stake.
In April, Broadcom signed a long-term agreement to supply Google with future generations of custom AI chips through 2031.
Broadcom's ability to meet explosive AI demand has also been tested by a strained supply chain. To reduce its reliance on any single manufacturer, the company in July signed a multi-year memorandum of understanding with Samsung Electronics, worth over $200 billion.
AI chip sales more than tripled to $16.7 billion in the third quarter, lifting Broadcom's total revenue to $29.59 billion, which beat estimates of $29.36 billion. Adjusted profit came in at $3.32 per share, compared with estimates of $3.24.
Newsletter
Week in Review
Subscribe to our Chief Editor’s Week in Review
Our chief editor shares analysis and picks of the week's biggest news every Saturday.
Sign up for our newsletters
Get our pick of top stories and thought-provoking articles in your inbox
Get the CNA app
Stay updated with notifications for breaking news and our best stories
Get WhatsApp alerts
Join our channel for the top reads for the day on your preferred chat app