(Reuters) -Chipmaker Broadcom on Wednesday raised its annual revenue forecast and announced a stock split, following a huge rally in the shares, with Wall Street betting heavily on the hardware that powers its generative AI technology.
Shares of the Palo Alto, California-based company rose 12% in extended trading. The stock is up more than 30% so far this year, after nearly doubling in 2023.
The company will conduct a 10-for-1 stock split in an effort to make its shares more affordable to retail investors. Split-adjusted trading is expected to begin on July 15.
Broadcom produces advanced networking chips that help move large amounts of data used by AI applications such as OpenAI’s ChatGPT, making it one of the beneficiaries of companies investing heavily in the booming technology.
Broadcom posted $3.1 billion in revenue from AI products in the second quarter.
The custom chips unit has also attracted orders from major cloud providers looking to reduce their reliance on Nvidia’s expensive processors.
Revenue from the semiconductor solutions segment, which houses the company’s networking and custom chips, rose about 6% to $7.20 billion in the quarter, compared to Visible Alpha’s estimate of $7.12 billion.
Broadcom had said in March that it had added a third customer for its custom AI chip business. The other so-called “hyperscalers” for which it makes custom chips are widely considered by analysts to be Google and Meta.
Revenue from the company’s infrastructure software segment more than doubled as it expanded its software portfolio through acquisitions of leading software vendors such as VMware.
Broadcom now expects full-year 2024 revenue of about $51 billion, including contribution from VMware, up from its previous forecast of about $50 billion. Analysts estimate an average of $50.42 billion, according to LSEG data.
It also raised its annual core profit forecast and beat analyst expectations for second-quarter earnings and revenue.
(Reporting by Arsheeya Bajwa in Bengaluru; Editing by Shilpi Majumdar)
