Red-hot chipmaking giant Broadcom Inc. narrowly beat earnings expectations for its second quarter today and also provided robust guidance for the curret quarter, but its stock cooled after-hours.

The company reported earnings before certain costs such as stock compensation of $1.58 per share, beating the $1.56-per-share target. Revenue for the period gained 20% from a year earlier to $15 billion, just ahead of the analyst consensus estimate of $14.99 billion.

Officials reported net income for the quarter of $4.97 billion, more than double the $2.12 billion net profit they delivered in the year-ago period. For the current quarter, Broadcom is looking for revenue of around $15.8 billion, higher than Wall Street’s target of $15.7 billion.

The numbers were strong across the board, but Broadcom’s stock moved more than 4% lower in today’s after-hours trading session, suggesting investors were either hoping for more – or are simply taking profits following a tremendous rally over the last couple of months. At today’s market close, the stock had risen 78% from its April closing low, which came at the height of concerns relating to U.S. tariffs.

Still, Broadcom’s stock is up 12% in the year to date, having doubled its value in the previous fiscal year due to growing optimism around its artificial intelligence chip business. That’s an area that continues to grow. In the company’s previous earnings call in March, Chief Executive Hock Tan (pictured) said it was developing customized AI chips for three large cloud providers.

“We continue to make excellent progress on the multiyear journey of enabling our three customers and four prospects to deploy custom AI accelerators,” Tan said in a conference call today. He added that those customers are “unwavering” in terms of their commitment to keep investing in AI.

The chipmaker reported AI revenue of $4.4 billion during the previous quarter, up 46% from a year earlier, with Tan attributing much of that increase to demand for networking chips such as the new Tomahawk 6 series, which connect large clusters of AI accelerators.

A couple of days prior to Broadcom’s earnings report, analysts from Melius Research proclaimed the company as a “must-own” AI stock, citing its relationship with fabless chip providers. They added that the company’s networking business, which accounts for about 30% of AI revenue, is likely to continue growing rapidly as customers look to scale their AI chip clusters. The analysts also noted that Broadcom is “unique” among AI chipmakers in the scope of its offerings, selling both high-performance chips and more cost-effective alternatives.

Tan said in a statement that the company expects AI revenue to grow to $5.1 billion in the current quarter, as “hyperscale partners continue to invest.” He added that he believes AI will continue to drive growth throughout fiscal 2026. Broadcom’s hyperscale partners include companies such as Amazon Web Services Inc., Microsoft Corp. and Google LLC, which are all racing to build out their cloud-based AI infrastructure to power their own AI services, and also those of their customers.

Sales to hyperscalers fall within Broadcom’s semiconductor solutions business, which generated $8.4 billion in revenue during the quarter, up 17% from a year ago and above the Street’s $8.34 billion forecast.

The company also operates a profitable software business that includes VMware. Revenue in that segment jumped 25% from a year earlier, to $6.6 billion, just ahead of the Street’s consensus estimate.

Holger Mueller of Constellation Research Inc. told SiliconANGLE that Broadcom has been firing on all cylinders, with AI momentum helping it to break through the $15 billion revenue barrier for the first time.

“Demand for AI keeps moving up both its semiconductor and its infrastructure software businesses, though it’s the latter that’s actually growing faster,” the analyst said. “Investors will also be pleased with Broadcom’s effective cost management, with an extra $400 million going into R&D. Hock Tan and his team must keep investing to keep up the pace of growth.”

Photo: Sarbjeet Johal (Stackpane)/YouTube