(Bloomberg) — Broadcom Inc., a chip supplier to Apple Inc. and other major technology companies, rebounded in late trading after its latest results and annual forecasts beat expectations, boosted by robust demand for artificial intelligence products.
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Second-quarter profit was $10.96 per share, excluding some items, the company said in a statement on Wednesday. That compared to an average estimate of $10.80. Revenue rose to $12.5 billion, compared to a projection of $12.1 billion.
Revenue for the full fiscal year, which runs through October, will be about $51 billion, according to the company. Analysts had forecast around $50.6 billion, and Broadcom previously said that figure would be closer to $50 billion.
The race to build artificial intelligence systems has benefited semiconductor companies like Broadcom, even if they don’t sell Nvidia Corp.’s highly prized AI chips. Broadcom offers a range of components used in computers and networks – including components vital to data centers – giving it a boost to the trend. The acquisition of VMware by Broadcom also made a positive contribution to the results, according to Chief Executive Officer Hock Tan.
“Broadcom’s second quarter results were again driven by demand for AI and VMware,” he said in the statement. Revenue from AI products alone reached a record $3.1 billion during this period, Tan said.
Total AI sales for fiscal year 2024 will exceed $11 billion, Tan predicted. And non-AI chip revenues, which have been low lately, bottomed out in the second quarter. “The economy is likely to recover modestly in the second half of FY24,” he said on a conference call with analysts.
Shares of Broadcom rose as much as 14% in late trading after the report was released. This year, the price was up 34% to $1,495.51 after the close in New York. That compares with a 32% gain for the closely watched Philadelphia Stock Exchange Semiconductor Index.
The Palo Alto, California-based company also announced a 10-for-1 stock split, effective July 15. Broadcom follows Nvidia in taking such a step. The split of that company became effective on June 7.
Broadcom’s semiconductor division had revenue of $7.2 billion in the three months ended May 5. That compares with an average estimate of $7.12 billion, according to data compiled by Bloomberg. Infrastructure software revenue was $5.29 billion, beating the forecast of $4.93 billion.
Broadcom, one of the largest companies in the semiconductor industry, has risen in the rankings following a series of acquisitions by Tan. That makes it a barometer for how the overall chip market is doing.
Data center providers rely on its custom chip design and network semiconductors to build AI systems, but the company also sells components for cars, smartphones and internet access equipment. And it is increasingly expanding into software, including products for mainframe computers, cybersecurity and data center optimization.
The acquisition of VMware, which closed in November, was a big part of the software push.
“We are making very strong progress in integrating VMware and accelerating its growth,” Tan said during the conference call.
Apple is a top customer: Broadcom supplies important components for the iPhone. During earnings calls, Tan typically provides updates on Broadcom’s often contentious relationship with that company, though he obliquely refers to it as its “North American customer” or some other vague description.
During Wednesday’s call, Tan said Broadcom’s relationship with this customer remains “deep, strategic and multi-year.”
(Updates with comments from the conference call starting in the sixth paragraph.)
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