Broadcom forecasts quarterly revenue below expectations on broader demand weakness
Broadcom forecast fourth-quarter revenue slightly below Wall Street estimates on Thursday, on worries bleak enterprise spending and stiff competition in the networking chip space will outweigh benefits from a boom in artificial intelligence-led demand.
Shares of the San Jose, California-based company fell 3.4% in extended trading.
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Offering CollegeCourseWebsiteNorthwestern UniversityKellogg Post Graduate Certificate in Product ManagementVisitIndian School of BusinessISB Digital TransformationVisitIndian School of BusinessISB Digital Marketing and AnalyticsVisitIIM LucknowIIML Executive Programme in Data ScienceVisit Soft enterprise demand, coupled with slower-than-expected recovery in consumer electronics markets such as smartphones, has also taken a toll on Broadcom's semiconductor business.
The entire software industry is feeling the pain of slashed IT budgets across enterprises, both in the U.S. and Europe. Broadcom's software portfolio has also been impacted by the same.
Even as the company has introduced new networking products to suit AI workloads, competition is rising from Nvidia's alternative to ethernet chips, InfiniBand and companies like Marvell Technology.
Broadcom's weak outlook reflects its exposure to traditional compute servers, where demand is feeble as it is being «cannibalized» by AI servers, said Summit Insights Group analyst Kinngai Chan.
«Demand is very mixed in the storage networking and broadband access markets,» he added.
The chip company expects current-quarter revenue to be about $9.27 billion. Analysts on average expect revenue to be $9.28 billion, according to Refinitiv data.
Revenue in the third quarter was $8.88 billion. Analysts polled
