Broadcom’s CEO, Hock Tan, saw the company’s shares soar by 12% after beating analysts’ estimates with their fiscal second-quarter earnings. The company reported earnings per share of $10.96, surpassing the consensus estimate of $10.84 per share. Revenue came in at $12.49 billion, exceeding the expected $12.03 billion.
Looking ahead, Broadcom anticipates sales of about $51 billion for its fiscal 2024 year, a jump from its previous forecast and slightly above the consensus estimate of $50.42 billion. Analysts believe that Broadcom is well-positioned to benefit from the growing trend of investing in artificial intelligence. They see the company as a critical player in the development of AI infrastructure.
Goldman Sachs analysts issued a note to investors stating that Broadcom is essential for AI infrastructure and reiterated a Buy rating on the stock with an 8% upside potential. They set a 12-month price target of $1,850, up from $1,550. Bank of America analysts also reiterated their buy rating, highlighting Broadcom’s position for growth in custom AI chips and Ethernet networking. They mentioned that Broadcom can cater to enterprise customers deploying AI by selling VMware.
The Bank of America analysts forecast sales of $51.5 billion for FY24, exceeding guidance due to continued AI ramp-up. They also project sales growth for FY25/26 to increase to 16% and 10% year-over-year, up from 14% and 8% previously.
In addition to the positive financial performance, Broadcom announced a 10 for 1 stock split on Wednesday, with shares expected to trade on a split-adjusted basis starting on July 15. Overall, the company’s strong earnings and outlook signal a promising future for Broadcom in the AI industry.
The rise in Broadcom’s stock value and positive reception from analysts demonstrate the company’s strong position in the AI market. As investments in AI continue to grow, Broadcom’s growth potential in custom AI chips, networking, and enterprise solutions makes it an attractive choice for investors. The stock split announcement further adds to the company’s positive outlook and sets the stage for continued success in the coming years.
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https://www.cnbc.com/amp/2024/06/13/broadcom-stock-up-13percent-on-earnings-beat-increased-demand-for-ai-chips.html