1 June (Reuters) – Broadcom (AVGO.O) expected third-quarter sales to beat market expectations on Thursday, benefiting from big investments by companies in AI-related technology.
ChatGPT’s viral success has sparked a surge in orders for the chips that power large-scale data center technology, sparking a surge in the stock prices of semiconductor companies serving some of the hottest markets.
Broadcom CEO Hock Tan said generative AI could account for more than 25% of the company’s semiconductor revenue by 2024.
“Today, our revenue from this opportunity represents about 15% of our semiconductor business,” Tan said, adding that in fiscal year 2022, it will be only 10%.
Broadcom supplies chips used for networking in data centers, as well as specialized chips that speed up the work of AI. In April, the company released a new chip that uses network technology to connect supercomputers for AI work.
The San Jose, Calif.-based company’s stock has fallen nearly 2% in the last days of volatile trading after the bell.
“Investors are likely to be disappointed with the company’s prospects as expectations have swelled in the wake of Nvidia’s strong outlook,” said Kinggai Chan, an analyst at Summit Insights Group. .
Nvidia (NVDA.O) said in May that it expected second-quarter sales to beat Wall Street forecasts by more than 50% and was increasing supply to meet surging demand for its AI chips. .
Broadcom expects revenue of about $8.85 billion for the current quarter, compared with an analyst estimate of $8.72 billion in a Refinitiv survey.
Second-quarter sales were $8.73 billion, an increase of 8 percent from the expected $8.71 billion.
On an adjusted basis, the company’s earnings were $10.32 per share, compared to expectations of $10.08 per share.
Reporting by Xavi Mehta and Tiyashi Dutta in Bangalore.Editing: Anil DiSilva
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