June 6 - Broadcom (NASDAQ:AVGO) projected stronger-than-expected third-quarter revenue on Thursday, backed by sustained demand for its networking and custom AI chips.

The semiconductor firm guided revenue of about $15.80 billion for the quarter ending in August, slightly ahead of analysts' consensus of $15.71 billion, based on LSEG data.

Despite the beat, shares slipped 2.5% in pre-market trading Friday. The dip followed a 3% decline in after-hours trading Thursday, as investors reacted cautiously following a sharp run-up in the stock, nearly 30% over the past month.

Broadcom has started shipping its new Tomahawk 6 networking chip, designed to double performance for AI data workloads. The chip is aimed at cloud infrastructure clients, including OpenAI and Alphabet's Google (NASDAQ:GOOGL).

CEO Hock Tan said AI chip revenue is expected to climb to $5.1 billion in the current quarter, which would mark a tenth straight quarter of growth. However, non-AI chip sales remain sluggish and near a bottom, he noted on the earnings call.

The semiconductor division, which includes networking and data center components, brought in $8.41 billion in Q2, up nearly 17%.

Overall revenue for the quarter came in at $15 billion, narrowly topping forecasts.

This article first appeared on GuruFocus.