Broadcom reported weaker-than-expected revenue in its fiscal second-quarter earnings report, according to CNBC, though the chipmaker’s stock slid in extended trading despite strong year-over-year growth. Here’s how the company performed against LSEG consensus estimates: Earnings per share were $2.44, adjusted, versus $2.40 estimated, and revenue came in at $22.19 billion versus $22.27 billion estimated.

Strong AI Revenue Growth and Market Performance

Broadcom said revenue climbed 48% from $15 billion in the same quarter a year earlier; Sales have increased in recent quarters, driven by demand for custom AI chips, including Google’s tensor processing unit. The company said revenue this quarter will be about $29.4 billion, versus $28.53 billion expected by Wall Street analysts, according to CNBC.

Net income increased to $9.31 billion. Broadcom shares are up close to 40% this year as of Wednesday’s close, topping the Nasdaq’s 16% gain; the stock has multiplied almost ninefold since the end of 2022, when ChatGPT kicked off the generative AI boom. Or $1.91 per share. Up 88% from $4.97 billion, or $1.03 per share in the same quarter a year earlier; Adjusted earnings exclude stock-based compensation and tax adjustments.

Custom AI Chip Demand and Strategic Partnerships

Broadcom helps other technology companies build custom chip designs, offering intellectual property and other essential technologies that AI chips require. It has attracted increased attention from investors as cloud giants including Amazon, Meta, and Microsoft design their own custom chips. In December, Tan said that Anthropic had placed an order for $10 billion in AI chips, according to CNBC.

AI revenue more than doubled in the second quarter on an annual basis to $10.8 billion, which CEO Hock Tan attributed in a statement to the company’s custom AI chips as well as other parts needed to network them together. He said the company expected AI revenue to triple in the current quarter to $16 billion.

Market Reaction and Forward Guidance

Broadcom’s Q2 FY26 revenue reached $22.2 billion, up 48% year over year, with GAAP net income of $9.3 billion and GAAP diluted EPS of $1.91. Non-GAAP net income was $12.1 billion and non-GAAP EPS $2.44. Adjusted EBITDA reached $15.2 billion (69% of revenue). Free cash flow was $10.3 billion, 46% of revenue. AI semiconductor revenue was $10.8 billion in Q2, up 143% year over year. For Q3 FY26, Broadcom guides revenue of about $29.4 billion, up 84%, with non-GAAP operating margin of 67% of revenue and Adjusted EBITDA at 68% of revenue, according to Stock Titan.

The board declared a quarterly dividend of $0.65 per share, payable June 30, 2026, to shareholders of record on June 22, 2026. Despite these positive figures, AVGO has declined 5.40%, reflecting a notable negative market reaction, according to Stock Titan.

According to TradingKey, Broadcom’s AI chip market is expected to grow further, with order backlogs exceeding $73 billion and custom chip orders set to remain strong until 2028. However, structural risks include potential gross margin declines due to increased ASIC usage and uncertainties in VMware software growth in China.