Broadcom reported impressive results on the back of its significant growth in artificial intelligence chips. The company raised its full-year revenue forecast and announced a stock split in an effort to attract more retail investors. The move follows a surge in its stock price this year and reflects Broadcom's leadership in the AI wave. Its advanced network chips have demonstrated strong capabilities in processing AI applications, making it the target of many technology giants competing for cooperation. The following is a detailed interpretation of Broadcom's latest financial report.
Broadcom on Wednesday raised its annual forecast for revenue from chips that help artificial intelligence work by 10% and announced a stock split in response to a rise in its stock price this year. Shares of the Palo Alto, California-based chipmaker jumped 12% in extended trading.
The company expects revenue from AI-related chips to reach $11 billion in 2024, compared with its previous forecast of $10 billion. Broadcom makes advanced network chips that help process the vast amounts of data used by AI applications, such as OpenAI's ChatGPT, making it one of the beneficiaries of a boom in corporate investment. In the second quarter, Broadcom generated $3.1 billion in revenue from AI products.
The company, which has seen its shares rise more than 30% this year and nearly double in 2023, will conduct a 10-for-1 forward stock split to make its stock more attractive to retail investors. Transactions after the spin-off are expected to begin on July 15.
Broadcom's custom chip unit has also attracted orders from large cloud service providers that want to reduce their reliance on Nvidia's pricey processors. Broadcom is widely believed to be customizing chips for companies including Google and Meta.
Revenues from Broadcom's Semiconductor Solutions segment rose approximately 6% to $7.2 billion. Ben Bajarin, an analyst at Creative Strategies, said: "Broadcom has a lot of room to grow as the data center market shifts to AI servers. In many ways, (Broadcom) will be the second-biggest beneficiary of this shift, behind Nvidia." "
Revenue from Broadcom's infrastructure software division doubled as a result of its acquisition of VMware. Broadcom raised its full-year revenue forecast by $10 billion to $51 billion. Additionally, the company raised its full-year core profit forecast and beat second-quarter LSEG estimates for adjusted earnings per share and revenue.
All in all, Broadcom's strong performance in the field of artificial intelligence chips and its positive strategic adjustments make it full of opportunities for future development. The stock split also reflects the company's confidence in its long-term development and is expected to further enhance its market competitiveness.