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Broadcom Raises Revenue Forecast on AI Chip Demand but Shares Dip

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Broadcom delivered a stronger-than-expected revenue forecast for its third quarter, supported by robust demand for its networking and custom AI computing chips. The company projected Q3 revenue of approximately $15.80 billion, exceeding analysts’ average estimate of $15.71 billion according to LSEG data.

Despite the upbeat forecast, Broadcom’s shares fell 4% in after-hours trading. The stock had already climbed nearly 30% over the past month and around 12% for the year, leading some investors to view the forecast as insufficiently exceeding high market expectations. “Clearly, expectations were high coming into the print,” said Kinngai Chan, senior research analyst at Summit Insights Group.

The Palo Alto-based company plays a crucial role in the AI hardware ecosystem, designing custom processors and networking chips for major AI and cloud computing clients such as OpenAI and Google. Broadcom has begun shipping its newest networking chip, the Tomahawk 6, which doubles the performance of its predecessor and enhances data center efficiency for AI workloads.

Broadcom CEO Hock Tan highlighted the ongoing growth, noting that AI semiconductor revenue is expected to accelerate to $5.1 billion in the third quarter, marking ten consecutive quarters of growth. “Our hyperscale partners continue to invest,” Tan stated. In contrast, non-AI semiconductor revenue remains sluggish and near the bottom of its cycle.

For the second quarter, Broadcom reported total revenue of $15 billion, narrowly surpassing analysts’ estimates of $14.99 billion. Revenue from its semiconductor segment, which includes products for data centers and networking, grew 16.7% year-over-year to $8.41 billion.

South Korea’s Export Growth Slows to 14-Month Low Amid U.S. Tariff Uncertainty

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South Korea’s export growth in November is expected to have reached its weakest level in 14 months, continuing a four-month slowdown, according to a Reuters poll. Economists cited declining demand in the United States, driven by trade policy uncertainties under the incoming Trump administration, as a major factor impacting outbound shipments.

Declining Export Growth

Exports are forecast to have increased by just 2.8% year-on-year in November, a slowdown from the 4.6% rise recorded in October. This marks the 14th consecutive month of export growth, but the smallest gain during the streak. The slowdown is attributed to weaker demand for goods beyond semiconductors, including automobiles and IT products.

“Non-semiconductor exports, particularly auto sales to the U.S., are slowing, while IT demand is gradually weakening,” said Chun Kyu-yeon, an economist at Hana Securities.

Impact of U.S. Tariff Policies

U.S. President-elect Donald Trump has pledged to impose significant tariffs on imports from Canada and Mexico. These policies are expected to create a challenging environment for South Korean manufacturers reliant on U.S. demand.

In the first 20 days of November, South Korea’s exports rose by 5.8%, supported by a jump in semiconductor shipments. However, automobile exports declined, and shipments to the U.S. fell by 2.5%, marking the first drop since July 2023. Meanwhile, exports to China grew by 3.5%.

Economist Lee Seung-hoon of Meritz Securities stressed the importance of U.S. manufacturing recovery, stating, “A recovery in U.S. manufacturing activity will be critical for broader strength across South Korea’s export sectors.”

Trade Outlook

The survey forecast a modest 0.4% rise in imports for November, compared to a 1.7% increase in October. The trade balance is projected to show a surplus of $5.15 billion, a significant increase from October’s $3.15 billion.

While the semiconductor sector has remained a strong performer, other sectors’ weaknesses could weigh on South Korea’s economic growth prospects. “The semiconductor rebound offers some comfort, but it will be overshadowed by broader export sector challenges,” noted Oh Suk-tae, an economist at Société Générale.

South Korea’s official trade data for November will be released on Sunday, December 1, at 9 a.m. local time.