Broadcom forecasts third-quarter revenue above estimates on AI boost
6:57 pm Thursday, June 01st, 2023
By Tiyashi Datta
(Reuters) – Broadcom Inc forecast third-quarter revenue above market estimates on Thursday, as it benefits from massive corporate investments in AI-related technologies.
The viral success of ChatGPT has sparked a surge in orders for chips that underpin the technology at big data centers, driving a rally in shares of semiconductor companies that cater to the hottest slice of the market.
Broadcom Chief Executive Hock Tan said generative AI could account for more than 25% of the company’s semiconductor revenue in 2024.
“Our revenue today, from this opportunity, represents about 15% of our semiconductor business,” Tan said, adding that it was only 10% in fiscal 2022.
Broadcom supplies chips used in data centers for networking and specialized chips that speed up AI work. It released a new chip for wiring together supercomputers for AI work using networking technology in April.
Shares of the San Jose, California-based company were last down nearly 2% in choppy trading after the bell.
“We believe investors are disappointed with the company’s outlook as expectations were ratcheted up after the strong outlook provided by Nvidia,” Summit Insights Group analyst Kinngai Chan said.
Nvidia Corp in May forecast second-quarter revenue more than 50% above Wall Street estimates, and said it was boosting supplies to meet surging demand for its AI chips.
Broadcom forecast current-quarter revenue of about $8.85 billion, while analysts polled by Refinitiv are expecting revenue of $8.72 billion.
Revenue in the second quarter rose 8% to $8.73 billion, compared with the estimates of $8.71 billion.
On an adjusted basis, the company earned $10.32 per share, compared with the estimates of $10.08 per share.
(Reporting by Chavi Mehta and Tiyashi Datta in Bengaluru; Editing by Anil D’Silva)
