Broadcom is a chip supplier to Apple and other large technology companies. The company's latest performance and annual forecast exceeded expectations, boosted by strong demand for artificial intelligence products, and its stock price rose in the late trading session.
The company stated in a statement on Wednesday that its second quarter profit was $10.96 per share (excluding certain items). By comparison, the average expectation is $10.80. Revenue increased to $12.5 billion, compared to an expected $12.1 billion.
The company stated that sales for the entire fiscal year ending in October will reach approximately $51 billion. Analysts expect it to be around $50.6 billion, while Broadcom earlier stated that this number will approach $50 billion.
Botong is one of the chip manufacturers benefiting from the trend of artificial intelligence, as its devices can run various artificial intelligence applications favored by the technology industry. Broadcom stated that the $3.1 billion in sales for this quarter can be attributed to revenue from artificial intelligence products. For example, Broadcom collaborated with Google to partially design its own AI chip TPU.
The competition for artificial intelligence systems benefits semiconductor companies such as Broadcom, even though they do not sell the highly acclaimed artificial intelligence chips produced by Nvidia. Botong provides a range of components for computing and networking, including critical components for data centers, which has driven its development trend. Its custom chip division has also attracted orders from large cloud providers who want to reduce their reliance on Nvidia's expensive processors.
Hock Tan, CEO of Broadcom, stated that the acquisition of VMware has also boosted performance.
"The second quarter performance of Broadcom was once again driven by the demand for artificial intelligence and VMware," he said in a statement. Mr. Chen stated that the revenue from artificial intelligence products alone reached a record breaking $3.1 billion.
Mr. Chen predicts that the total sales of artificial intelligence in the fiscal year 2024 will exceed 11 billion US dollars. The recently sluggish revenue from non artificial intelligence chips hit bottom in the second quarter. He stated in a conference call with analysts that a moderate recovery is likely to occur in the second half of fiscal year 24.
Hock Tan, CEO of Broadcom, said during a earnings conference call, "Speaking of AI accelerators, you may know that our ultra large clients are accelerating their investments to expand the performance of these clusters. As a result, we have just secured a contract to provide the next generation of customized AI accelerators for these ultra large clients."
"As the data center market shifts towards artificial intelligence servers, Broadcom has extremely high room for growth. In many ways, Broadcom will become the second largest beneficiary of this transformation, second only to Nvidia," said Ben Bajarin, analyst at Creative Strategies.
After the report was released, the stock price of Broadcom rose 14% in late trading. As of the close of trading in New York, the stock has risen 34% so far this year to $1495.51. In contrast, the highly anticipated Philadelphia Stock Exchange Semiconductor Index rose 32%.
This Palo Alto, California based company has also announced a 10-1 stock split, which will take effect on July 15th. Botong closely follows Nvidia in taking this measure. The spin off of the company took effect on June 7th.
As of May 5th, the revenue of Broadcom's semiconductor division was 7.2 billion US dollars. According to data compiled by Bloomberg, this number is higher than the average expected $7.12 billion. The sales revenue of infrastructure software was 5.29 billion US dollars, exceeding the expected 4.93 billion US dollars.
As one of the largest companies in the semiconductor industry, Broadcom ranks among the top through a series of acquisitions by Chen Fuyang. This makes it a barometer of the performance of the entire chip market.
Data center providers rely on their custom chip designs and network semiconductors to build AI systems, but the company also sells parts for cars, smartphones and Internet access devices. The company is continuously expanding into the software field, including products for large-scale computers, network security, and data center optimization.
The VMware acquisition completed in November is an important component of the software business.
"We have made significant progress in integrating VMware and accelerating its growth," Chen Fuyang said during a conference call.
Apple is its biggest customer: Broadcom provides key components for iPhones. During the financial report conference call, Chen Fuyang usually updates on the frequently disputed relationship between Broadcom and the company, although he indirectly refers to it as a "North American customer" or other vague descriptions.
Chen stated in a conference call on Wednesday that the relationship between Broadcom and the client remains "profound, strategically significant, and will be maintained for many years.".
Article source: Insights into the Semiconductor Industry