Broadcom shares fell about 10% despite beating earnings and revenue forecasts, as AI semiconductor growth accelerates.

Broadcom reported adjusted earnings of $2.44 per share on revenue of $22.19 billion for the quarter ended May 3, exceeding analyst expectations of $2.39 per share and $22.13 billion in revenue. Semiconductor revenue increased 79% year over year to $15.01 billion.

AI-related semiconductor sales reached $10.8 billion during the quarter, up 143% from the prior year, driven by demand for custom AI accelerators and networking products. The company expects AI semiconductor revenue could exceed $16 billion in the third quarter, representing growth of more than 200% from a year earlier.

For the third quarter, Broadcom forecasts revenue of about $29.4 billion and adjusted EBITDA margin of roughly 68%, above analyst estimates of $28.25 billion in revenue. The board approved a quarterly cash dividend of $0.65 per share, payable June 30 to shareholders of record as of June 22.