Overview
- Broadcom reported fiscal second‑quarter results on Thursday that beat earnings while disclosing $10.8 billion in AI semiconductor revenue, a 143% year‑over‑year rise, and guided Q3 revenue to $29.4 billion with $16 billion in AI chip sales.
- Management said it booked more than $30 billion of new AI orders during the quarter, a pipeline that far exceeds current shipments and could take many quarters to convert into revenue.
- The company warned that a growing mix of custom application‑specific chips (ASICs) carries lower per‑unit margins and guided consolidated gross margin to about 74% next quarter, saying scale and long‑term customer lock‑in are the trade‑offs for lower unit economics.
- Markets reacted sharply, sending Broadcom shares down roughly 12–16% and dragging other chip stocks as investors punished the stock for a muted near‑term AI sales outlook and for not raising the company’s multi‑year AI forecast.
- Broadcom also signaled a strategic shift by partnering with financial firms to finance and build AI compute capacity, with CEO Hock Tan noting a first tranche valued near $35 billion led by Apollo and saying the company will favor organic AI growth over large acquisitions.