Broadcom Inc., a chip supplier for Apple Inc. and other tech giants, saw a significant increase in its stock price after reporting strong earnings and a positive outlook driven by high demand for artificial intelligence products. The company’s second-quarter earnings exceeded expectations, reaching $10.96 per share, with revenue hitting $12.5 billion. Full-year sales are projected to reach $51 billion, higher than analysts’ estimates.
The ongoing race to develop artificial intelligence systems has been a boon for semiconductor companies like Broadcom, which provides essential components for computing and networking. The demand for AI products contributed to a record $3.1 billion in revenue in the recent quarter. CEO Hock Tan attributed the strong results to this demand as well as the acquisition of VMware.
Broadcom’s shares surged by 16% following the earnings report, reaching $1,735.85, marking the largest intraday gain since March 2020. Tan also announced a 10-for-1 stock split effective July 15, following in the footsteps of other companies like Nvidia. The semiconductor division of Broadcom reported revenue of $7.2 billion, exceeding estimates, while infrastructure software sales reached $5.29 billion.
The company’s aggressive acquisition strategy, led by Tan, has positioned it as a prominent player in the chip market. Data center vendors rely on Broadcom’s custom chip design and networking semiconductors for AI systems, as well as components for various other devices. The acquisition of VMware has further strengthened Broadcom’s foothold in software development.
Apple remains a key customer for Broadcom, providing components for the iPhone. Tan emphasized the importance of their relationship during the earnings call, describing it as “deep, strategic, and multi-year.” Looking ahead, Broadcom is optimistic about its prospects, predicting total AI sales to exceed $11 billion by fiscal 2024, with the expectation of modest recovery in non-AI chip revenue by the second half of that year.
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https://finance.yahoo.com/news/broadcom-gains-ai-computing-demand-202314942.html
