Broadcom reported third-quarter revenue of $29.6 billion on Wednesday, an 86% increase from the same period a year earlier, as demand for its custom AI chips drove results to a record. The company guided fourth-quarter revenue to approximately $34.8 billion, a 93% increase from the prior year period.

Analysts had been looking for fourth-quarter revenue of $35.03 billion on average, leaving Broadcom’s guidance modestly short of expectations, according to Reuters, citing data compiled by LSEG. Broadcom stock fell more than 3% in extended trading following the results.

The guidance shortfall comes as competitive pressures mount in the custom chip market. Marvell last month closed a custom chip partnership with Google under which the search giant could contribute $120 billion in revenue through fiscal 2033. Broadcom has also grappled with supply constraints, and in July entered a multi-year agreement with Samsung Electronics valued at more than $200 billion as part of efforts to diversify its manufacturing base.

Broadcom’s semiconductor solutions segment generated $20.8 billion in revenue, up 127% year over year and accounting for 70% of total revenue. Infrastructure software contributed $8.8 billion, a 29% increase from the prior year period.

AI chip sales reached $16.7 billion in the third quarter. For the fourth quarter, Broadcom said it expects AI chip sales of $21.7 billion.

On a GAAP basis, Broadcom posted operating income of $16.0 billion and diluted earnings per share of $2.68. On a non-GAAP basis, operating income reached $20.1 billion and diluted earnings per share came in at $3.32. Net income on a GAAP basis was $13.1 billion, up 216% from a year earlier.

The company generated $14.2 billion in cash from operations during the quarter, and free cash flow of $13.7 billion, equal to 46% of revenue. Cash and cash equivalents stood at $24.0 billion at quarter’s end.

Broadcom’s board declared a quarterly dividend of $0.65 per share, and the company set fourth-quarter non-GAAP operating income guidance of approximately 66% of projected revenue.