Broadcom stock sinks as revenue forecast falls short of estimates

Broadcom (AVGO) stock tumbled roughly 4% before trimming losses in after-hours trading on Wednesday, after the AI chip and networking giant's revenue forecast disappointed investors.

The company 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.

The miss overshadowed a solid quarter. Broadcom's adjusted earnings per share came in at $3.32 versus Wall Street expectations of $3.23, while quarterly revenue grew 86% year over year to $29.6 billion, topping estimates of $29.45 billion. Third quarter AI semiconductor revenue reached $16.7 billion, up 221% year over year and 54% quarter over quarter.

Acree, who has a Buy rating on the stock, said he could understand the selling pressure, adding that the beat was "not enough to keep investors happy." CEO Hock Tan said in the earnings release that "demand for our custom AI accelerators and networking continues to be very strong."

The stock is up 6% year-to-date, versus peer Nvidia's (NVDA) 20% gain. Acree called Broadcom "really just second only to Nvidia as far as its ecosystem across the data center," adding: "It's just a matter of when do you enter and when do you trade around a position."