What happened: Broadcom (AVGO) stock tumbled roughly 4% before trimming losses in after-hours trading on Wednesday.
What's behind the move: The AI chip and networking giant said it expects revenue of $34.8 billion for its current quarter, below the $35.05 billion consensus expected by analysts, according to Bloomberg data.
"I can understand the selling pressure," Cody Acree, StoneX financial equity research analyst, told Yahoo Finance. The analyst, who has a Buy rating on the stock, noted the chipmaker's fiscal Q3 revenue and earnings beat was "not enough to keep investors happy."
"The magnitude is not quite enough from a top and bottom line standpoint on the beat and raise when you have a company that is this levered to AI," said Acree.
The company's adjusted earnings per share came in at $3.32 versus Wall Street expectations of $3.23. Its quarterly revenue grew 86% year over year to $29.6 billion, topping expectations of $29.45 billion.
What else you need to know: Broadcom has seen revenue surge as tech giants race to make custom silicon and build out data centers.
"Demand for our custom AI accelerators and networking continues to be very strong," CEO Hock Tan said in the company's earnings release.
The company said third quarter AI semiconductor revenue of $16.7 billion grew 221% year over year, and 54% quarter over quarter.
The stock is up 6% year-to-date versus peer Nvidia's (NVDA) 20%.
"Broadcom is really just second only to Nvidia as far as its ecosystem across the data center," said Acree. "It's just a matter of when do you enter and when do you trade around a position."
Ines Ferre is a senior business reporter for Yahoo Finance.
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