Broadcom Stock Tumbles as Outlook Disappoints; Semiconductor Peers Also Decline

Shares of Broadcom (AVGO) tumbled Friday after the semiconductor giant disappointed investors with its full-year sales outlook.

Broadcom said it expects to book $50 billion in revenue in its 2024 fiscal year, reiterating guidance it first issued in December. That disappointed investors, who may have been looking for the company to raise its guidance after reporting better-than-expected revenue in the first quarter of the year.

Broadcom brought in $11.96 billion in revenue in the quarter ended Feb. 4., compared with estimates of $11.8 billion. Adjusted earnings of $10.99 per share represented a 66-cent increase from the year-ago quarter and beat Wall Street’s expectations.

The company’s revenue, which grew 34% year-over-year, got a boost from its recent acquisition of VMWare. Stripping out VMWares sales, revenue increased 11%. 

“Strong demand for our networking products in AI data centers, as well as custom AI accelerators from hyperscalers, are driving growth in our semiconductor segment,” said CEO Hock Tan in the company’s earnings release.

Broadcom wasn’t the only chip company hurt on Friday by an earnings outlook investors deemed not quite good enough. Marvell Technology (MRVL) predicted adjusted earnings in its fiscal first quarter would be 23 cents per share, plus or minus 5 cents. That forecast fell short of Wall Street’s expectations and overshadowed a 54% increase in data center revenue. 

The two reports weighed on semiconductor stocks on Friday. Broadcom shares traded 6.5% lower Friday afternoon, while Marvell was off 11% at around 2:00 p.m. ET. Nvidia (NVDA), which has gained more than $1 trillion in market cap this year, fell 5%. Advanced Micro Devices (AMD), which competes with Nvidia for AI data center business, slipped nearly 2%. Shares of companies that make the equipment required to fabricate semiconductors, like Applied Materials (AMAT) and Lam Research Corp. (LRCX), also fell Friday.