Broadcom (AVGO) shares fell around 3% in after-hours trading on Wednesday despite the semiconductor and software group delivering record quarterly revenue and profit, highlighting how elevated investor expectations have become during the artificial intelligence boom.
The company reported fiscal second-quarter revenue of $22.19 billion, up 48% from a year earlier, while adjusted earnings per share reached $2.44, ahead of Wall Street forecasts. Net income surged 88% to $9.31 billion, reflecting continued demand for AI-related infrastructure and custom chip designs.
Investors had pushed Broadcom shares to record highs ahead of the results, adding roughly $300 billion to the company’s market value over the past five trading sessions as traders positioned for another strong quarter.
That rally left little room for disappointment, and the stock retreated despite management forecasting further growth.
Broadcom expects revenue of approximately $29.4 billion in the current quarter, comfortably ahead of analyst estimates, while chief executive Hock Tan said momentum in artificial intelligence remains strong.
AI-related semiconductor revenue jumped 143% year-on-year to $10.8 billion during the quarter, driven by demand for custom accelerators and networking products used in large-scale data centres. Tan said AI semiconductor revenue is expected to grow by more than 200% from a year earlier in the third quarter, reaching around $16 billion.
The company has become one of the key beneficiaries of the race among technology giants to build AI infrastructure. Broadcom supplies custom chip technology and networking components to major customers including Google, Meta, Anthropic and OpenAI, while cloud providers continue to pour billions into expanding computing capacity.
Its semiconductor solutions division generated $15.1 billion in revenue, beating market expectations as demand for AI hardware offset weakness elsewhere. Infrastructure software revenue, which includes assets acquired through Broadcom’s VMware takeover, rose 9% to $7.18 billion, although that figure came in below analyst forecasts.
The results arrive as semiconductor stocks continue to power broader equity markets higher amid a wave of spending on AI data centres and computing infrastructure. Broadcom shares had already gained nearly 40% this year before the earnings release and have risen almost ninefold since the end of 2022, when the generative AI boom began gathering pace.
While the latest figures reinforced Broadcom’s position as a major winner from AI investment, the after-hours decline suggested investors were looking for even stronger signs that growth can keep accelerating from already exceptional levels.
