Broadcom shares slide after earnings
Shares of chipmaking giant Broadcom are down more than 3.8% on earnings that were only slightly above estimates. After a huge rally in shares to $479 from $289 in late March, a 'slight beat' isn't nearly enough and it highlights some of the vulnerability in the AI trade.
Similarly, Crowdstrike reported after the bell and shares also sank on a slight beat. That comes after rival Palo Alto Networks beat hugely yesterday only to see shares sink after an initial 10% jump.
In terms of the numbers the company reported Q2 revenue of $22.19 billion, up 48% year-over-year, compared to expectations around $22.0 billion. Adjusted EPS was $2.44, a modest beat versus the roughly $2.40 expected. Adjusted EBITDA rose 52% to $15.24 billion, or 69% of revenue.
The AI numbers were strong on the surface. AI semiconductor revenue rose 143% year-over-year to $10.8 billion, ahead of the company’s forecast, driven by custom AI accelerators and AI networking. Broadcom guided for Q3 AI semiconductor revenue of $16.0 billion, up more than 200% year-over-year and an impressive sequential rise that could underpin the stock. Shares initially fell 7% before halving the decline.
The overall problem is that expectations had run even higher into the report. Overall Q3 revenue guidance of $29.4 billion implies 84% year-over-year growth, with adjusted EBITDA expected around 68% of revenue, but investors were looking for a more decisive upside surprise after the stock’s sharp rally.
Segment revenue showed the same split. Semiconductor solutions revenue rose 79% to $15.0 billion, while infrastructure software revenue rose 9% to $7.18 billion. Free cash flow was strong at $10.26 billion, or 46% of revenue.
The takeaway is that Broadcom remains one of the clearest AI winners in the market, but the stock had already priced in a great deal of that. A clean quarter and strong AI guide were not enough to clear the bar.
This article was written by Adam Button at investinglive.com.提供 MainLink：Investinglive RSS Breaking News Feed
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