Chipmaker Broadcom $AVGO released 3Q results. Earnings came in above expectations, while revenue failed to surprise. Investors were disappointed by the 4Q outlook, expecting it to be higher due to AI.

Results

Semiconductor Solutions revenue was $6.94 billion, versus analyst estimates of $6.87 billion, and $6.62 billion a year ago.

Software infrastructure revenue was $1.94 billion, with consensus of $1.91 billion, up from $1.84 billion a year ago.

The company had adjusted EBITDA of $5.8 billion, versus analyst estimates of $5.71 billion. Adjusted EBITDA increased $423 million year-over-year from $5.38 billion.

The company's adjusted operating earnings were $5.54 billion, versus an estimate of $5.52 billion.

The company generated free cash flow of $4.60 billion, up $289 million year-over-year from $4.31 billion.

The company repurchased 2.9 million shares for $2.167 billion in the fiscal third quarter. Broadcom paid a dividend of $4.60 per share for the third quarter and approved another dividend of the same amount with a record date of Sept. 21.

Outlook

The company is looking for 4Q revenue of $9.27 billion, analysts had estimated $9.28 billion. Broadcom estimates adjusted EBITDA to be approximately 65% of revenue.

Analysts' view

Analysts at Wells-Fargo wrote: "Broadcom delivered solid results and outlook, and the excitement around generative AI has left investors hungry for more. [...] Wells-Fargo remains focused on Broadcom's ability to reaccelerate growth after its soft landing."

KeyBanc Capital Markets analysts wrote: "Broadcom reported results and outlook within expectations with AI helping the company navigate its soft landing. [...] the company is witnessing a 'soft landing' in all its segments except networking, the latter was impacted by 'weak enterprise demand'."

Analysts at Piper Sandler write: "Broadcom's growth was driven by AI, but other segments stagnated. [...] The company reported strong results that showed a 'well-managed soft landing'."

CEO comment

Broadcom CEO Hock Tan commented on the quarterly results, "Broadcom's third quarter results were driven by demand for next-generation networking technologies as hyperscale clients expand their networks in AI clusters in datacenters."

Broadcom shares

Broadcom shares have weakened 5.65% in the pre-market and trade at $880 per share.