Broadcom forecasts quarterly sales below estimates amid rising custom AI chip competition

Wed, September 2, 2026 at 8:56 PM UTC

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Sept 2 (Reuters) - Broadcom forecast quarterly revenue below Wall Street estimates on Wednesday, signaling intense competition could hamper gains from its custom processors.

Shares of the Palo Alto, California-based company fell over 3% in extended trading. They have gained about 6% this year, significantly underperforming rivals and the broader semiconductor index.

While Broadcom is a key player in the chip sector, it lags behind AI bellwether Nvidia, whose dominant graphics processors remain the industry standard for AI workloads.

The company expects fourth-quarter revenue of about $34.8 billion, compared with analysts' average estimate of $35.03 billion, according to data compiled by LSEG.

Finance chief Amie Thuener said the company expects to maintain its adjusted operating margin at 66% for the fourth quarter, flat from a year ago.

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Broadcom also said it expects AI chip sales of $21.7 billion in the fourth quarter, slightly above estimates of $21.33 billion, according to analysts polled by Visible Alpha.

The company's customers are also signing deals with rival firms. Last month, Marvell struck a custom chip deal with Google that could make the search giant one of its biggest investors with an up to $12.2 billion stake.

In April, Broadcom signed a long-term agreement to supply Google with future generations of custom AI chips through 2031.

Broadcom's ability to meet explosive AI demand has also been tested by a strained supply chain. To reduce its reliance on any single manufacturer, the company in July signed a multi-year memorandum of understanding with Samsung Electronics, worth over $200 billion.

AI chip sales more than tripled to $16.7 billion in the third quarter, lifting Broadcom's total revenue to $29.59 billion, which beat estimates of $29.36 billion. Adjusted profit came in at $3.32 per share, compared with estimates of $3.24.

(Reporting by Anhata Rooprai in Bengaluru; Editing by Joyjeet Das)

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Source: “AOL Money”