Broadcom shares have gained just 6% so far this year, lagging behind the broader chip sector, which has risen 60%. The company's outlook offered minimal upside relative to expectations.

Broadcom reported July-quarter earnings results on Wednesday afternoon.

Broadcom topped expectations with its latest quarterly financial results, but that wasn't enough to send its stock higher.

The chip maker 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 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.

Shares of Broadcom were falling 2.5% in after-hours trading on Wednesday. The stock is up just 6% so far this year, lagging behind the broader PHLX Semiconductor Index SOX which is up 60% in the same period. Broadcom is the fourth-worst performer in that index for the year.

Ahead of the results, Jamie Meyers, senior securities analyst at Laffer Tengler Investments, noted that Broadcom's stock had fallen following its prior earnings report despite the results being "actually really good."

Broadcom co-develops custom chips with its customers, and these compete with Nvidia's (NVDA) graphics processing units. Meyer said investors will be questioning competition in the market as more companies look to make their own hardware.

Still, the semiconductor market is expanding as demand grows, and while there are different ways to measure competition, "as long as the pie is expanding that fast, I'd rather get a chunk of the pie than focus on my percentage of market share," Meyers said.

-Britney Nguyen