What Forecast Did Broadcom Give?
According to Broadcom, its revenue from the sale of AI semiconductors will be $16 billion for the third quarter of their ongoing fiscal. The quarter will end in July. The figure was lower than the average estimate of analysts, which stood at $17.2 billion
For the full year, Broadcom expects to sell AI chips worth $56 billion, again falling short of expectations of $57.6 billion. Broadcom’s fiscal year ends in October.
What Accelerated The Fall In Broadcom?
The fall in Broadcom’s shares was also accelerated after the stock had gained for four days in a row prior to the results before ending Wednesday’s regular trading session lower.
Broadcom shares had gained 14% over the last four sessions, adding over $250 billion to their market capitalization.
Even though Broadcom has signed and expanded long-term deals with Alphabet, Anthropic and Meta, the question asked by the street is how much revenue will be recognized each quarter, contrary to being accounted for in a multi-year backlog.
How Did Broadcom Fare In Q2
For the second quarter that just concluded, Broadcom reported sales of $22.2 billion, in-line with expectations of $22.1 billion.
Sales were up 48% on a year-on-year basis.
AI semiconductor sales were at $10.8 billion, also in-line with expectations of $10.7 billion.
Details Of Broadcom-OpenAI Partnership
Broadcom has already begun to deliver chips to OpenAI and is on track for production later this year.
The company has a contract to deploy 1.3 GW capacity in 2027, as part of an agreement that was announced last year to deploy 10 GW by 2029.
Broadcom will also be deploying 3 GW of computing power for Meta through the end of 2028.
Before the results announcement, Broadcom shares were up 38% for the year so far.
