Broadcom Inc. (NASDAQ:AVGO) shares fell more than 4% in after-hours trading on Thursday, reversing initial gains even after the semiconductor giant delivered a fourth-quarter earnings beat and reported record artificial intelligence (AI) revenue.
Check out AVGO’s stock price here.
Profitability Under Pressure
Despite a 74% surge in AI sales, investors focused heavily on disappointing guidance regarding shrinking gross margins and a sharply higher tax rate for fiscal 2026.
While the company posted the fourth quarter revenue of $18.02 billion—beating analyst estimates of $17.49 billion—management offered a cautious outlook for profitability that spooked the market.
CFO Kirsten Spears guided for fiscal first-quarter gross margins to drop approximately 100 basis points sequentially.
This compression is driven by a shift in revenue mix toward lower-margin AI hardware components, fueling fears of profitless growth where top-line expansion comes at the cost of efficiency.
CFO Shocks With Tax Hike
Compounding the bearish sentiment, Broadcom forecasted its non-GAAP tax rate will jump from 14% to …