Broadcom CEO Hock Tan says generative artificial-intelligence applications will boost demand for the company’s chips.
Chip maker Broadcom (ticker: AVGO) provided a revenue forecast for its July quarter above expectations. Its shares also rose in after-hours trading.
On Thursday,
Broadcom
(ticker: AVGO) reported fiscal-second-quarter adjusted earnings per share of $10.32, topping the $10.12 Wall Street consensus estimate, according to FactSet. Revenue came in at $8.73 billion, roughly in line with expectations of $8.7 billion.
Broadcom’s guidance was also above expectations. It gave a revenue forecast of $8.85 billion for the fiscal third quarter, compared with the $8.72 billion expected by analysts.
“Our third-quarter outlook projects year-over-year growth, reflecting continued leadership in networking as we support a measured ramp into large-scale AI networks,” CEO Tan said in the earnings release.
The chip maker’s stock traded up as much as 4.3% to $823.63 following the release.
On the call with analysts and investors, Tan said Broadcom’s revenue trajectory exposed to generative AI is expected to double this fiscal year from when it began the fiscal year.
Some of the Broadcom’s chips have exposure to generative AI systems, which has been a popular investment theme this year. The technology ingests text, images, and videos in a brute-force manner to create content. Interest in this form of AI was sparked by OpenAI’s release of ChatGPT late last year.
Broadcom’s semiconductors are in a number of categories, including networking, broadband, server storage, wireless, and industrial. Due to the broad-based nature of its end-markets, it can be seen as an indicator for the rest of the industry.
Earlier this week, KeyBanc Capital Markets analyst John Vinh raised his price target on Broadcom stock to $820 from $720, and maintained his Overweight rating, citing its progress in AI.
Broadcom shares are up 38% over the past 12 months, compared with the 16% rise for the
iShares Semiconductor
exchange-traded fund (SOXX), which tracks the performance of the ICE Semiconductor Index.
Write to Tae Kim at [email protected]
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