Shares of Broadcom Inc. ( AVGO ) are trading lower Friday, despite the company reporting robust third-quarter earnings that exceeded market expectations. Here’s what you need to know.

Earnings Recap: The company reported revenue of $13.072 billion, beat analyst estimates of $12.96 billion. This marks a significant 42% increase compared to last year.

Earnings per share (EPS) also beat expectations, coming in at $1.24 against the forecasted $1.20. The strong performance was driven by robust demand for Broadcom’s AI semiconductor solutions.

AI and VMware: The Twin Engines of Growth

Broadcom's ( AVGO ) AI business continues to gain momentum, with quarter-over-quarter growth of 3%-4% in the July quarter. The AI-driven surge is complemented by strength in Broadcom’s non-AI semiconductor segment, expected to grow 10% in the upcoming quarter. VMware, acquired by Broadcom ( AVGO ), has also significantly contributed, with infrastructure software revenue surging 41% in the third quarter.

Analyst Reactions

JPMorgan analyst Harlan Sur remains bullish, raising the stock's price target to $210 by December 2025, based on Broadcom's ( AVGO ) diversified growth drivers. However, despite these positive developments, some analysts noted that Broadcom's ( AVGO ) guidance could have been more aggressive, reflecting a cautious approach amid uncertain market conditions.

Major firms, including Benchmark, Goldman Sachs, Morgan Stanley and Cantor Fitzgerald, have reiterated their Buy or Overweight ratings.

Market Reaction: A Selloff

The selloff comes as a surprise, especially given the company's strong financial performance and promising outlook. The stock had dipped as much as 9.4% in premarket trading following the earnings release.

Looking Ahead: What's Next for Broadcom ( AVGO )?

Broadcom's ( AVGO ) management has set its sights on a strong finish to the year, with fourth-quarter revenue expected to reach approximately $14 billion. The company also anticipates adjusted EBITDA to be around 64% of the projected revenue, indicating continued profitability.

AVGO Price Action: Broadcom ( AVGO ) shares were down by 9.7% at $138.00 according to Benzinga Pro.

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