Important Information to Review Before Broadcom’s Earnings Release

Broadcom, a semiconductor company, is preparing to announce its second-quarter earnings for fiscal 2024 on June 12. Analysts are expecting the company to report increased revenue compared to the same period last year. Investors will be particularly interested in the revenue growth related to artificial intelligence (AI), as Broadcom’s products are utilized in AI data centers. Additionally, updates on the company’s custom AI chip projects with hyperscale customers will be of interest.

Analysts project Broadcom’s revenue for the second quarter of 2024 to be $12.04 billion, up from $8.73 billion in the same period in 2023. Net income is expected to be $2.22 billion, with diluted earnings per share of $4.88, compared to $8.15 in the same period last year. After adjusting for certain one-time expenses, non-GAAP net revenue is anticipated to be $5.33 billion.

Broadcom has been benefiting from the AI era, with its networking infrastructure and semiconductor offerings being used in AI data centers. The company’s CEO, Hock Tan, highlighted the strong demand for networking products in AI data centers and custom AI accelerators from hyperscalers. Analysts expect semiconductor revenue to reach $7.12 billion and networking revenue to be $4.93 billion.

Broadcom has positioned itself as a leader in designing custom AI chips for hyperscalers like Google, Meta, and ByteDance. The company is expected to generate $10 billion in AI chip sales in 2024. Hyperscalers are increasingly investing in custom chips for AI workloads, which could benefit Broadcom in the long run.

Analysts believe that AI revenue could approach $50 billion over time, especially if Broadcom can secure more customers for custom accelerators. The company recently announced an agreement with a third client focused on consumer AI. Broadcom’s shares have seen a 27% increase since the beginning of the year, closing at $1,413.09 on June 5.

In their earnings call, Broadcom is likely to provide updates on the progress of existing custom AI chip projects and potential deals with new customers. Overall, investors will be closely watching Broadcom’s performance in the AI sector and its ability to capitalize on the growing demand for custom chips in the industry.

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https://www.investopedia.com/broadcom-q2-fy-2024-earnings-preview-8657956