Chip, storage shares sank on Thursday. Philadelphia Semiconductor Index down 2%; SOXL down over 6%; Western Digital, Broadcom down over 5%; Seagate Tech, SK Hynix down over 4%; Astera Labs, ARM, ASML, SMCI down over 3%; Micron, SanDisk down over 2%.
Broadcom topped expectations with its latest quarterly financial results, but that wasn't enough to send its stock higher.
The chip maker late Wednesday reported revenue of $29.6 billion for the July quarter, up 86% from the previous year, and above the $29.2 billion that analysts tracked by FactSet had been anticipating. The company's adjusted earnings of $3.32 per share for the quarter came in ahead of estimates for $3.22.
Broadcom's (AVGO) semiconductor-solutions business, which includes both AI and non-AI chips, recorded July-quarter revenue of $20.8 billion, which was up 70% from last year and topped the $20.3 billion that analysts tracked by FactSet were looking for.
"Demand for our custom AI accelerators and networking continues to be very strong," Broadcom CEO Hock Tan said in a statement. He added that the "momentum continues" into the current quarter, when the company expects AI chip revenue to reach $21.7 billion. That would represent growth of 236%.
Broadcom offered limited upside, however, with its outlook for the October quarter. The company is calling for revenue of $34.8 billion at the midpoint of its forecast. Analysts tracked by FactSet had been modeling $34.7 billion.
On the company's earnings call, Tan said Broadcom has secured enough supply to double its AI revenue outlook for fiscal year 2027, which starts on November 2, to $115 billion. He added that demand "exceeds this outlook," and that the company will continue to focus on improving supply. Broadcom said it expects capital spending to reach $1.4 billion in the current quarter as it invests in semiconductor capacity.
In fiscal 2028, Tan said Broadcom expects AI chip revenue to double again to $230 billion. On that, Tan said the company is on track "to exceed $30 in earning per share in fiscal 2028."