Broadcom Stock Dips 11.6% Despite Exceeding Q4 Earnings Expectations
Broadcom shares experienced a significant 11.6% drop on Friday, a surprising turn of events given the semiconductor giant’s record-breaking fourth-quarter results that outperformed Wall Street predictions.
The company reported a revenue of $18.02 billion, overtaking the estimated $17.46 billion, with a noteworthy 65% year-over-year increase in AI-related revenue, which reached a staggering $8.2 billion. Despite these impressive figures, investors responded unfavorably to the management’s cautionary note that the surge in AI sales could potentially result in lower gross margins due to the higher proportion of AI-related products.
CEO Hock Tan projected that AI semiconductor revenue is set to double year-over-year in the first quarter to $8.2 billion. This growth is anticipated to be driven by custom AI accelerators and Ethernet AI switches.
Despite the robust performance and a 10% dividend increase to $0.65 per share, concerns regarding margin pressure and broader AI valuation apprehensions played a part in the stock’s sell-off. However, it’s important to note that the stock remains up by 48% year-to-date, even considering the recent decline.
Source: www.fool.com