(Bloomberg) -- Broadcom Inc., a chip supplier for Apple Inc. and other big tech companies, gave a lackluster revenue forecast in a sign that slower demand for products outside of AI is weighing on growth.
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Sales will be roughly $14 billion in the fiscal fourth quarter, which runs through October, the company said in a statement Thursday. Analysts had projected about $14.1 billion.
The forecast suggests that Broadcom’s non-AI operations are growing more slowly than anticipated. Though the company has benefited from a surge in artificial intelligence spending, its other divisions aren’t as connected to this bonanza. The company has a wide variety of offerings, including mainframe products, security and data center software, mobile-phone chips and data storage gear.
Broadcom shares fell about 5% in extended trading following the announcement. The stock closed at $152.82 in regular New York trading, leaving it up 37% for the year.
The company is projecting $12 billion of revenue from AI-related products for the full year, beating the average analyst projection of $11.8 billion. That suggests that the shortfall in the total quarterly sales forecast came from other areas.
Third-quarter profit was $1.24 a share, excluding some items. That compared with an average estimate of $1.22. Revenue rose to $13.07 billion, compared with a projection of $13.03 billion. The company is much larger than it was a year ago, partly because of its acquisition of VMware Inc., which it bought for roughly $69 billion.
Broadcom’s semiconductor division had revenue of $7.27 billion in the three months ended Aug. 4. Software sales were $5.8 billion.
Chief Executive Officer Hock Tan turned Broadcom into one of the largest players in the chip industry through a series of acquisitions. His strategy is to find businesses that are dominant in certain fields, purchase those companies, and then refocus them exclusively on those areas. Tan also has used that formula to expand into software.
The AI spending boom has turned Broadcom’s chip peer Nvidia Corp. into the biggest, most valuable company in the industry. Nvidia sells so-called AI accelerators that help develop tools such as ChatGPT, but Broadcom has benefited as well by supplying related components and software.
Data center providers rely on Broadcom’s custom-chip design and networking semiconductors to build their AI systems. The company also sells components for cars, smartphones and internet access gear. Its push into software, meanwhile, includes products for mainframe computers, cybersecurity and data center optimization.
Apple is a top customer as well: Broadcom provides key components for the iPhone. During earnings calls, Tan typically gives updates on Broadcom’s often-contentious relationship with that company, which he refers to obliquely as his “North American customer.”
(Updates with more from results in fifth paragraph.)
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