Broadcom stock gains on earnings and strong guidance

Hock Tan, CEO of Broadcom, says generative AI applications will boost demand for the company’s networking chips.

On Thursday, Broadcom (stock ticker: AVGO) reported strong earnings and provided revenue forecasts for the April quarter that were above expectations. Its shares rose in after-hours trading.

The chip maker reported fiscal first-quarter adjusted earnings per share of $10.33, beating Wall Street consensus estimate of $10.17, according to FactSet. Revenue was $8.92 billion, roughly in line with expectations of $8.9 billion. The company said its semiconductor solutions segment brought in revenue of $7.1 billion in the quarter, while its infrastructure software segment brought in $1.8 billion.

Broadcom’s guidance was above estimates, too. It provided a revenue forecast of $8.7 billion for the fiscal second quarter, compared to the $8.6 billion expected by analysts.

“Broadcom’s first quarter performance reflects continued strength in infrastructure demand across all of our end markets,” CEO Hock Tan said in the release. “Looking forward, we are confident that our growth will be driven by sustainable leadership in next-generation technologies in all of our core markets, and strong partnerships with our customers.”

Shares of the chip maker initially traded up 1.5% after the issue.

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On the call with analysts and investors, Tan said generative AI software requires fast connections, which should drive demand for Broadcom networking chips.

Earlier this week, Susquehanna analyst Christopher Rowland reiterated his positive assessment of Broadcom stock and increased his price target to $685 from $650.

“We believe Broadcom will continue to outperform its peers,” Rowland wrote. “We remain strong believers in AVGO’s franchise, capital allocation and integration strategy.”

The analyst noted strong demand trends for Broadcom’s networking chips and cybersecurity software business. He wrote that the company continues to “demonstrate that economies of scale are an effective driver of earnings power for those who can execute in the semiconductor industry.”

Broadcom stock is up 2% over the past 12 months, compared to a 12% decline in


iShares Semiconductor

An exchange-traded fund (SOXX), which tracks the performance of the ICE Semiconductor Index.

Write to Tae Kim at [email protected]

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