Broadcom Falls on Google Defection Fears Despite AI Chip Boom

Broadcom Inc. gave a revenue forecast that missed market expectations, overshadowing rapid growth in its artificial intelligence business and fueling concern that competition will intensify as big tech companies diversify suppliers.

On September 2, Broadcom said revenue for the May-to-July period totaled $29.59 billion, beating the market forecast of $29.25 billion. Adjusted earnings per share came in at $3.32, above Wall Street's estimate of $3.21. AI semiconductors drove the growth, with third-quarter AI chip revenue reaching $16.7 billion, more than triple the level a year earlier.

Its outlook, however, fell short of expectations. Broadcom projected fourth-quarter revenue of $34.8 billion, below Wall Street's estimate of $35.03 billion. The stock closed down 0.66% in regular trading on the day and fell more than 3% in after-hours trading after the results were released.

Investors are focused on rising competition in the custom AI chip market. As big tech companies investing in AI infrastructure seek to reduce their reliance on Nvidia and spread chip orders across multiple suppliers, concerns are mounting that Broadcom's market position could weaken. Google signed a custom chip supply agreement with Marvell Technology last month. Broadcom is diversifying its supply chain and expanding production capacity to reduce its dependence on specific customers.

Lee Hye-in, Hankyung.com reporter hey@hankyung.com