What Happened: Shares of Broadcom (AVGO) narrowed their losses after falling as much as 4% in after-hours trading on Wednesday. What’s behind the move: The AI chips and networking giant saw revenue growth amid booming AI demand, but the company’s results weren’t enough to send the stock higher. Shares plunged immediately after the results and later pared losses. “I can understand the selling pressure,” Cody Acree, financial equity research analyst at StoneX, told Yahoo Finance. The analyst, who has a Buy rating on the stock, noted that the chipmaker’s fiscal third-quarter revenue and earnings were “not enough to keep investors happy.” “The magnitude is not enough from a revenue and bottom line standpoint when you have a company so leveraged toward AI,” Acree said. The company’s adjusted earnings per share were $3.32, compared to Wall Street expectations of $3.23. Its quarterly revenue grew 86% year over year to $29.6 billion, beating expectations of $29.45 billion. The company said third-quarter AI semiconductor revenue of $16.7 billion grew 221% year over year and 54% quarter over quarter. Broadcom said it expects revenue of $34.8 billion for its current quarter, below the $35.05 billion consensus expected by analysts, according to Bloomberg data. What else you need to know: Broadcom has seen a surge in revenue as tech giants compete to manufacture custom silicon and build data centers. “Demand for our custom AI networks and accelerators remains very strong,” CEO Hock Tan said in the company’s earnings release. The stock is up 6% so far this year versus 20% for peer Nvidia (NVDA). “Broadcom is actually second only to Nvidia when it comes to their data center ecosystem,” Acree said. “It’s just a matter of when you enter and when you negotiate a position.” Inés Ferré is a senior business reporter at Yahoo Finance. Click here for the latest tech news impacting the stock market. Read the latest financial and business news from Yahoo Finance.
