Given the difficult recent period for the artificial intelligence industry, Wall Street should be relieved by Broadcom Inc.’s most recent earnings and expectations.
At a time when investors are growing increasingly wary about the AI chip industry, the software and semiconductor business, which has rode the AI wave with its application-specific integrated circuits and more, provided forecasts ahead of expectations. Despite last week’s better-than-expected results and forecast from industry powerhouse Nvidia Corp. (NVDA), investors appeared to be seeking more oomph, and the company’s stock went on to experience its biggest post-earnings decline in years.
However, following a 6.3% decline in Thursday’s normal session due to the absence of significant positive news from rival Marvell Technology Inc. (MRVL), Broadcom shares (AVGO) surged 9.6% in Thursday’s after-hours trading on the company’s positive news.
While FactSet-tracked analysts were expecting $14.7 billion in revenue for the fiscal second quarter, Broadcom is expecting $14.9 billion.
Broadcom made $4.1 billion in AI sales in the most recent quarter, a 77% increase over the previous year. Strong hyperscale demand for the company’s products is expected to generate $4.4 billion in revenue for AI semiconductors in the fiscal second quarter.
In the fiscal first quarter, Broadcom’s total revenue was $14.9 billion, exceeding the $14.6 billion consensus estimate. The company’s semiconductor revenue of $8.2 billion was up 11% from the previous year, while its infrastructure software revenue of $6.7 billion was up 47%. Both $8.1 billion and $6.5 billion were sought for by analysts.
In recent years, the business has expanded its software presence, in part because of its acquisition of VMware, which closed in November 2023.
In its most recent quarter, Broadcom produced adjusted earnings per share of $1.60, up from $1.10 in the previous year. Analysts had anticipated $1.51.
Although Broadcom’s stock is up 33% over the last 12 months, it has lost roughly 23% of its value this year as of Thursday’s close.
