Broadcom has reported strong growth in its artificial-intelligence chip business, with AI chip sales rising more than 220% year-on-year to $16.7 billion in its latest quarter. 

Despite the growth, investors reacted negatively to the company’s outlook.

Broadcom forecast about $34.8 billion in revenue for the next quarter, slightly below Wall Street’s expectations. 

The weaker-than-expected forecast caused its shares to fall even though its latest quarterly results were supported by growing AI demand.

The company is an important player in the AI industry because it supplies custom chips and networking technology used by major technology companies building advanced data centres.

Broadcom’s management remains optimistic about future demand and has indicated that investment in AI infrastructure could continue growing.

The company believes its custom-chip business will benefit as large technology companies look for alternatives and specialised systems.

However, the market reaction shows that investors are becoming increasingly demanding. 

Strong AI growth alone may no longer be enough, companies are now expected to prove that the enormous spending on AI infrastructure can continue producing strong financial returns. 

Sources: Reuters