PALO ALTO – Broadcom reported record quarterly revenue and earnings driven by booming demand for artificial intelligence infrastructure, but investors sent the company's shares sharply lower after concluding the results were not strong enough to justify the market's lofty expectations.
The semiconductor and software giant reported fiscal second-quarter revenue of $22.19 billion, a 48 percent increase from a year earlier. Adjusted earnings came in at $2.44 per share, while AI semiconductor revenue surged 143 percent year-over-year to a record $10.8 billion.
Chief Executive Officer Hock Tan said the company's AI business continues to benefit from strong demand for custom AI accelerators and networking solutions used by major technology companies building large-scale artificial intelligence platforms. Broadcom expects AI semiconductor revenue to reach approximately $16 billion in the current quarter, representing growth of more than 200 percent compared to the same period last year.
Despite the impressive figures, Broadcom shares fell more than 13 percent following the earnings announcement. The decline surprised many investors given the company's strong financial performance and optimistic near-term outlook.
Market analysts said the selloff was largely driven by expectations rather than fundamentals. Broadcom's stock had rallied strongly ahead of earnings amid enthusiasm surrounding artificial intelligence, leaving investors looking for even more aggressive growth projections. While management reaffirmed its target of generating more than $100 billion in AI-related revenue by 2027, it did not significantly raise that forecast.
Investors also expressed concerns about future profit margins as AI-related custom chip business becomes a larger share of overall revenue. Some analysts noted that margins on custom chips can be lower than those generated by other segments of Broadcom's business. Questions have also emerged about whether major customers, including Google, may diversify portions of their AI chip supply chains in the future.
Nevertheless, Broadcom remains one of the biggest beneficiaries of the global artificial intelligence boom. The company has established itself as a leading supplier of custom AI chips and networking infrastructure used in large data centers, placing it alongside companies such as NVIDIA, AMD, and other major players in the rapidly expanding AI sector.
Broadcom also forecast third-quarter revenue of approximately $29.4 billion, well above last year's level and ahead of many analyst estimates, underscoring continued demand for AI infrastructure despite concerns about valuation and investor expectations.
While the market's immediate reaction was negative, analysts generally view the decline as a reassessment of expectations rather than a sign of weakening fundamentals. Broadcom's AI business continues to grow at an extraordinary pace, and the company remains positioned as one of the central beneficiaries of the global race to build artificial intelligence infrastructure.