Broadcom forecasts quarterly sales below estimates amid rising custom AI chip competition

Sept 2 (Reuters) - Broadcom forecast ‌quarterly revenue below ​Wall ​Street estimates on Wednesday, signaling intense competition could hamper gains from its custom processors.

Shares of the Palo Alto, California-based ‌company fell over 3% in extended trading. They have ⁠gained about 6% this year, significantly underperforming rivals and the broader semiconductor index.

While Broadcom ‌is a key player in ‌the chip sector, it lags behind AI bellwether Nvidia, whose dominant graphics processors remain the industry standard for AI workloads.

The company ​expects fourth-quarter revenue of about $34.8 billion, compared with analysts' average estimate of $35.03 billion, according to data compiled by LSEG.

Finance chief Amie Thuener ⁠said the company expects to maintain its adjusted operating margin at 66% for the fourth ​quarter, flat from a year ago.

Broadcom also said it expects AI chip sales of $21.7 billion in the fourth ​quarter, slightly above estimates of $21.33 billion, according ‌to analysts polled by Visible Alpha.

The company's customers are also signing deals with rival firms. Last month, Marvell ⁠struck a custom chip deal with Google that could make the search giant one of its biggest investors with an up to $12.2 billion stake.

In April, ⁠Broadcom signed a long-term agreement to supply Google with future generations of custom ​AI chips through 2031.

Broadcom's ability to meet explosive AI demand has also been tested by a strained supply chain. To reduce its reliance on any single ‌manufacturer, the company in July signed a multi-year memorandum of understanding with Samsung Electronics, worth over $200 billion.

AI chip ‌sales more than tripled to $16.7 billion in the third quarter, lifting Broadcom's ⁠total revenue to $29.59 billion, which ‌beat estimates of $29.36 billion. ​Adjusted profit came in at $3.32 per share, compared with estimates of $3.24.

(Reporting by Anhata Rooprai in Bengaluru; Editing by ‌Joyjeet Das)

---

Serious News for Serious Traders! Try StreetInsider.com Premium Free!

---

You May Also Be Interested In

• After-Hours Movers: AVGO, SNOW, HPE, NTAP, NTSK, CHPT, FIVE, TLYS, PVH, RARE
• Palantir stock tumbles as Google encroaches on defense AI market
• Google launches Gemini 3.8 Flash Cyber for government security