Broadcom reported earnings for the Q2 fiscal on Wednesday that beat analysts’ estimates. Broadcom also announced a 10-for-1 stock split, set to begin trading on a split-adjusted basis on July 15. Broadcom raised its annual forecast for revenue from chips that help in artificial intelligence work by 10% on Wednesday.
The timing of the stock split by Broadcom was just right taking advantage of a rally in its shares this year. Shares of the Palo Alto, California-based chipmaker Broadcom surged 12% in extended trading.
Broadcom’s earnings report
Here is how Broadcom did versus LSEG consensus estimates for the Q2 ended in May:
Broadcom’s earnings per share: $10.96 adjusted vs. $10.84 expected
Broadcom’s revenue: $12.49 billion vs. $12.03 billion expected
Broadcom’s revenue forecast is about $51 billion in sales during its fiscal 2024 year, an increase over the company’s previous forecast, and slightly higher than consensus expectations of $50.42 billion.
Broadcom reported $2.12 billion in net income during the quarter, or $4.42 per share, versus $3.48 billion in net income, or $8.15 per share, in the year-ago period.
Broadcom AI advantage
Broadcom is one of the chipmakers benefiting from the artificial intelligence boom because its devices can run the sorts of AI applications that have enamored the tech industry. Broadcom said $3.1 billion in sales during the quarter could be attributed to revenue from AI products. For example, Broadcom works with Google, which partially designs its own AI chip called a TPU.
“Talking of AI accelerators, you may know our hyperscale customers are accelerating their investments to scale up the performance of these clusters,” Broadcom CEO Hock Tan said on the earnings call. “And to that end, we have just been awarded the next-generation custom AI accelerators for these hyperscale customers of ours.”
Broadcom’s revenue
The company also said revenue from VMware, an enterprise software company it acquired for $69 billion late last year, contributed to its sales growth and forecast for the rest of the year.
The company’s overall revenue was up 43% on an annual basis during the quarter. Without VMware sales, it would have been up 12% on a year-over-year basis, Broadcom said. The company expects $11 billion in revenue from AI-linked chips in 2024, up from its previous forecast of $10 billion.
“As the data center market moves to AI servers, Broadcom’s upside is extremely high. In many ways (Broadcom) will be the second-biggest beneficiary of this shift, next to Nvidia,” said Ben Bajarin, analyst at Creative Strategies.
Broadcom shares
The company, which has seen its shares rally more than 30% so far this year, after almost doubling in 2023. Broadcom’s share price closed at $1,495.51. It is up 21.04% in the last 3 months and up 75.71% in the last 12 months.
