Broadcom’s stock experienced a decline despite reporting solid earnings results that surpassed Wall Street expectations. In the fiscal first quarter, the company reported adjusted earnings per share of $10.99, higher than the consensus estimate of $10.40, and revenue of $11.96 billion, beating expectations of $11.8 billion.
The semiconductor-solutions segment contributed $7.39 billion in revenue, while the infrastructure software segment generated $4.57 billion. Additionally, Broadcom provided full-year revenue guidance of $50 billion, which aligns closely with the Street consensus of $49.8 billion.
Despite these positive results, Broadcom’s stock fell by 3.9% to $1,352 following the earnings release. Investors may have been expecting a more optimistic outlook, given the stock’s strong performance over the past year, with a 125% increase compared to a 74% rise for the iShares Semiconductor ETF.
CEO Hock Tan attributed the company’s growth in the semiconductor segment to strong demand for networking products in AI data centers and custom AI accelerators from hyperscalers. Broadcom’s semiconductor offerings span various categories, including networking, broadband, server storage, wireless, and industrial, with some chips having exposure to generative artificial intelligence applications, reflecting a popular investment theme in recent times.