Broadcom Inc. (AVGO) shares fell 5 percent in extended trading Wednesday after reporting fiscal Q3 results that beat expectations but failed to inspire confidence in forward momentum.
The semiconductor and infrastructure software giant posted total revenue of $29.59 billion, more than doubling from $15.95 billion a year earlier. AI chip revenue tripled, climbing 221 percent year-over-year to $16.7 billion.
The sell-off reflected management's Q4 guidance: $21.7 billion in AI chip revenue, a sequential decline that signaled demand is normalizing after the company's explosive run-up. Analysts interpreted the outlook as disappointing relative to consensus expectations entering the call.
Broadcom stock has underperformed the semiconductor sector badly this year, gaining 6 percent while the broader chip industry is up 60 percent. The valuation remains punchy—the company trades at 61.54x earnings with a $1.75 trillion market cap—leaving little margin for error on execution.
Robert W. Baird analyst Colin Sebastian maintains a Buy rating with a $630 price target, implying 73 percent upside from current levels. That target assumes Broadcom's competitive position in hyperscaler AI infrastructure justifies a sustained premium to the sector. The catalyst: evidence that the Q4 deceleration is a timing issue, not a demand cliff. Watch for management commentary on hyperscaler inventory and server refresh cycles in coming quarters. If AI capex inflection stalls, the multiple compresses sharply.
