A semiconductor maker expects to make $12 billion from AI this year

The artificial intelligence boom is already making semiconductor maker Broadcom AVGO+4.34% billions in revenues.

Broadcom chief Hock Tan said in a statement accompanying third-quarter earnings that the company expects “revenue from AI to be $12 billion for fiscal year 2024 driven by Ethernet networking and custom accelerators for AI data centers.”

The Palto Alto, California-based company reported $13 billion in revenue for the third quarter, bringing in an adjusted $1.24 a share, narrowly beating analysts’ expectations.

Broadcom said Thursday that it expects sales of approximately $14 billion for the fourth quarter, following below of the $14.09 billion expected by analysts, according to data compiled by FactSet.

Shares of Broadcom fell 7.37% in pre-market trading Friday, to $141.55. Its stock is up more than 40% so far this year.

Its November 2023 acquisition of cloud computing VMWare has also helped drive this fiscal year’s results, Broadcom said. Despite falling short of Wall Street’s estimates, Broadcom’s fourth-quarter results are expected to be 51% higher than the same period last year.

Companies tied to the AI boom, from chipmakers to cloud computing and data center providers, have fallen under the microscope — especially during earnings season. When investors perceive a cautious outlook from these companies, they often begin to wring their hands.

Nvidia, the chipmaker that has become a multi-trillion dollar company seemingly overnight, reported record second-quarter revenue of $30 billion for fiscal year 2025 last week. That was up 122% from a year ago. Yet, its shares still fell in after-hours trading after coming short on guidance expectations.

Smaller earnings beats and more tepid guidance are all seen as red flags in the tech space, where so much is hinging on the blowout success of these major companies that are going all-in on AI.

Although much smaller (Broadcom has a market cap of $711 billion), Broadcom is an important player in the AI world, as it supplies chips to Apple and other big tech players.