On Thursday Eastern Time, Broadcom, a chip supplier for Apple, Google, and other large technology companies, released its first quarter financial report.
The financial report shows that although supported by the artificial intelligence boom, due to weak demand in other fields, Broadcom's semiconductor revenue has been dragged down, keeping the company's annual sales guidance unchanged.
After the financial report was released, the stock price of Broadcom fell more than 8% after trading, and as of the time of publication, the decline narrowed to 2.4%, failing to replicate the stock price surge brought by Dell's previous financial report. The company's stock price has risen by a cumulative 26% since the beginning of this year.
Broadcom's stock price has risen by a cumulative 122% in the past year
According to the financial report, in the first quarter of fiscal year 2024 (as of February 4th this year),
The adjusted earnings per share of the company were $10.99, slightly better than the analyst's previous estimate of $10.42 per share, a year-on-year increase of 6%;
Total revenue increased by 34% to $11.96 billion, slightly better than analysts' average expectation of $11.8 billion, a year-on-year increase of 34% (mainly due to the acquisition of software manufacturer VMware). Excluding VMware, Broadcom's revenue increased by 11%.
By department,
The revenue of the semiconductor division was 7.39 billion US dollars, lower than analysts' expectations of 7.7 billion US dollars, a year-on-year increase of 4%.
Infrastructure software sales increased by 153% year-on-year (mainly due to the acquisition of software manufacturer VMware), reaching $4.57 billion.
The semiconductor department accounted for 62% of Broadcom's first quarter revenue, while infrastructure software contributed 38% of sales.
AI brings strong demand
With the soaring stock price of NVIDIA, an AI seller, in the past year, market investors are searching for companies similar to NVIDIA that can make unexpected profits in the field of artificial intelligence.
Although Broadcom and Nvidia do not produce chips for training LLM to power artificial intelligence tools, it does provide important network components and handle custom chip design work, making it an indispensable part of large data centers that handle artificial intelligence workloads.
Although chip revenue did not meet expectations, Hock Tan, CEO of Broadcom, stated that there is strong demand for its network products from artificial intelligence data centers, and large cloud computing providers also have strong demand for its customized artificial intelligence chips.
Hock Tan stated at a press conference:
"We are pleased to have two strong revenue growth drivers in the first quarter and fiscal year 2024. Firstly, as customers deploy VMware Cloud Foundation, our acquisition of VMware will accelerate our infrastructure software department's revenue growth. Secondly, the strong demand for our network products from artificial intelligence data centers, as well as the AI accelerator customized for large-scale enterprises, are driving growth in our semiconductor field."
Hock Tan stated that AI spending will drive further growth this year. Broadcom predicts that by the end of fiscal year 2024, the demand for artificial intelligence will account for 35% of its semiconductor revenue, higher than the previously predicted 25%.