Broadcom stock turned lower late Thursday despite the semiconductor giant reporting stronger than expected fourth quarter results and issuing an upbeat revenue outlook driven by accelerating demand for artificial intelligence hardware.
The company’s earnings topped Wall Street estimates and highlighted rapid growth in custom AI accelerators and networking chips.
The Palo Alto based company reported adjusted earnings of $1.95 a share on revenue of $18.02 billion for the quarter ended Nov. 2.
Analysts surveyed by FactSet projected earnings of $1.87 a share and revenue of $17.47 billion. Broadcom said profit rose 37 percent from a year earlier while revenue climbed 28 percent, underscoring expanding demand from cloud providers building large scale AI data centers.
Broadcom stock initially rose more than 3 percent in after hours trading following the release but later fell over 3 percent to 392. The stock closed at 406.37 during the regular session, down 1.6 percent, and had touched a record high of 414.61 on Wednesday.
Chief Executive Hock Tan said in a statement that AI semiconductor sales surged 74 percent in the quarter and were poised to accelerate into early 2026.
Analysts said the reversal in Broadcom stock reflected investor caution after several months of heavy gains in semiconductor shares.
“The numbers were strong, but expectations for AI suppliers have risen sharply,” said Mark Ellison, a senior analyst at Redwood Research.
“Some investors are looking for even bigger beats or stronger margin commentary, so the stock reaction can be more muted even on good news.”
The company forecast revenue of $19.1 billion for the fiscal first quarter ending Feb. 1, above Wall Street expectations of $18.38 billion.
That outlook, driven by continued growth in AI chips for cloud giants, “offers evidence that AI buildouts remain a long term investment cycle rather than a short lived spike,” Ellison said.
Industry consultants said Broadcom’s expanding role in custom silicon is shaping competitive pressures in the AI hardware market.
“Broadcom is carving out a niche with tailor made accelerators for hyperscalers,” said Lina Morales, a semiconductor strategist at Synergy Insights.
“It’s a different path from Nvidia’s high volume GPUs but one that could support durable revenue growth if these customers continue scaling their AI footprints.”
Broadcom said it expects AI chip revenue to double year over year to $8.2 billion in the current quarter, supported by demand from Alphabet, Meta Platforms and other cloud operators.
The company also produces high speed Ethernet switches used to connect AI servers, a segment that has seen rising competition as data center architectures evolve.
The dividend announcement was another highlight for investors. Broadcom said it will raise its quarterly dividend by 10 percent to 65 cents a share in fiscal 2026, marking its fifteenth consecutive annual increase.
Broadcom stock remains listed on IBD’s Big Cap 20 and Tech Leaders indexes, reflecting strong performance over the past year even as volatility across chipmakers has increased.
The company’s year over year revenue growth outpaced many peers during the quarter, including AMD and Marvell, which have also leaned heavily into AI related components.
Some market participants said the after hours dip did not alter their long term view of Broadcom stock. “Short term swings don’t change the fact that AI spending is still in the early stages,” said San Francisco investor Robert Kline, who holds shares in the company.
“As long as Broadcom keeps landing large custom chip deals, the story remains intact.” Others were more cautious. “AI demand is strong, but the sector is crowded, and margins could come under pressure,” said Jess Hart, an independent trader based in Chicago.
“A lot of good news is already priced into semiconductor names.” Broadcom executives said momentum in custom accelerators and networking chips should continue through fiscal 2026 as cloud providers ramp up compute capacity for generative AI models.
The company has also been pushing deeper into infrastructure software following its acquisition of VMware, though analysts said integration challenges remain.
“Investors will be closely watching how Broadcom balances its hardware growth with the longer term integration of VMware,” said Morales of Synergy Insights.
“Both segments will need to perform for the company to justify recent gains in Broadcom stock.” The company plans to offer detailed guidance on its software business during its next earnings call.
Broadcom delivered a strong quarter fueled by accelerating AI chip demand and offered an optimistic revenue forecast.
While Broadcom stock slipped in after hours trading, analysts said the company’s position in custom silicon and data center networking leaves it well placed to benefit from ongoing AI infrastructure investments.
Market reaction, they added, reflects broader volatility in the semiconductor sector rather than concerns over Broadcom’s operational strength.
