Investing.com -- Broadcom (NASDAQ: AVGO) on Wednesday delivered a quarterly top- and bottom-line beat, as sales in its artificial intelligence semiconductor business more than doubled from a year ago.

Still, shares of the chip designer declined 5.4% after hours. It is worth noting that the stock was on a tear coming into earnings, having climbed more than 14% over the last four sessions and hitting a record high earlier in the day.

Broadcom is a major player in the semiconductor and infrastructure software solutions industries. The company designs artificial intelligence chips, while its other semiconductor products span several markets such as networking connectivity, wireless devices, servers and storage systems, and broadband. Its infrastructure software solutions cater to areas such as private cloud, cybersecurity, and enterprise software.

AVGO’s rivals include other chipmakers and designers such as Nvidia, Marvell, Qualcomm, and AMD. Broadcom has gained significance as a viable alternative to Nvidia for hyperscalers such as Alphabet and Meta to make microchips known as application-specific integrated circuits (ASICs).

The Palo Alto, California-based company earned $2.44 per share on revenue of $22.19 billion on an adjusted basis for its fiscal Q2 2026. Analysts had expected a profit of $2.39 per share on revenue of $22.13 billion.

"Q2 semiconductor revenue from AI of $10.8 billion grew 143% year-over-year, above our forecast, driven by increasing demand for custom AI accelerators and AI networking," Broadcom top boss Hock Tan said in a statement.

"The momentum continues and in Q3 we expect semiconductor revenue from AI to grow over 200 percent year-over-year to $16.0 billion," Tan added.

AVGO said it expects total Q3 revenue of about $29.40 billion, versus a consensus estimate of $28.61 billion.

The chip designer’s results come at a time when the AI trade has seen a furious rally, helping Wall Street shake off an ongoing Middle East conflict and return to record levels. Notably, the Philadelphia Semiconductor Index – a key barometer of chip stocks - is up a whopping 96.5% YTD and earlier in the year posted its longest daily win-streak on record. Broadcom itself has seen a big advance, with the stock up 38.5% YTD.

“AVGO is overbought on a short-term basis, but with momentum positive across timeframes, overbought conditions are likely to be absorbed. That said, the run-up (into earnings) may reduce the likelihood of a gap higher in response to earnings. Initial support for AVGO is near $392," Fairlead Strategies’ Katie Stockton noted. Broadcom last closed at $479.23.

The AI space has also seen shifting narratives in 2026. Sub-sectors such as software, office and enterprise services, and food delivery have been identified as areas which will see major disruption from the technology, leading to a decline in sentiment around companies that offer such products. At the same time, these companies have also moved to allay investor concerns by developing and integrating AI agents, amid soaring demand for agentic AI processes that go beyond simply answering prompts or generating text.