Broadcom, one of the world's biggest chip makers, said artificial intelligence spending is helping fuel sales but not enough to offset a broader post-pandemic slowdown.
In the fiscal third quarter, revenue will be about $8.85 billion, up 4 percent from a year earlier. Although that exceeds the analysts' estimate of $US$8.76 billion, it would represent its slowest growth in years. The stock slid in late trading.
The forecast suggests that Nvidia Corp. is not the only chipmaker benefiting from the AI frenzy. With its networking components, Broadcom directs traffic between computers in major data centers, and it creates custom chips for some of the world's biggest cloud computing companies. Nvidia's customers have been racing to add more capacity to handle demand for AI services, a trend that helped send Nvidia near the $1 trillion valuation threshold this week.
While Broadcom is still grappling with an industry-wide drop in tech demand, its sales growth has declinched sharply since a pandemic-fueled surge in recent years.
The stock dropped more than 3% in late trading after the report was released. They had closed at $789.95 in New York, which is up 41% this year. It made them one of the best semiconductor stocks in 2023.
Investors and analysts were told that pandemic boom times would not last. The shortages of recent years have led to an inventory glut in some regions, prompting customers to put off new orders.
The chips in Broadcom's chips go into smartphones and home networking, as well as data centers, making it a hub for across a broad spectrum of tech spending. The firm had previously said it would be ready to order books for the rest of the fiscal year, which ends in October.
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