Broadcom stock gains and solid forecasts
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Broadcom reported adjusted earnings per share of $10.33 for the fiscal first quarter, beating Wall Street’s consensus estimate of $10.17.
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Broadcom CEO Hock Tan says generative AI applications will drive demand for the company’s network chips.
On Thursday,
Broadcom
(Ticker: AVGO) reported strong earnings and issued a better-than-expected sales guidance for the April quarter. Its shares rose in after-hours trading.
The chipmaker reported adjusted earnings per share of $10.33 for the fiscal first quarter, beating Wall Street’s consensus estimate of $10.17, according to FactSet. Revenue came in at $8.92 billion, roughly in line with expectations of $8.9 billion. The company said its semiconductor solutions segment had revenue of $7.1 billion in the quarter, while its infrastructure software segment had $1.8 billion.
Broadcom’s guidance was also ahead of estimates. It gave a revenue guidance of $8.7 billion for the fiscal second quarter, compared to $8.6 billion expected by analysts.
“Broadcom’s first quarter performance reflects the continued strength of infrastructure demand across all of our end markets,” CEO Hock Tan said in the press release. “Looking ahead, we are confident that our growth will be fueled by sustained leadership in next-generation technologies across all of our core markets and strong partnerships with our customers.”
The chipmaker’s shares were initially up as much as 1.5% after the release.
Speaking to analysts and investors, Tan said that generative AI software requires fast connections, which should boost demand for Broadcom’s network chips.
Earlier this week, Susquehanna analyst Christopher Rolland reiterated his bullish view on Broadcom stock, raising his price target to $685 from $650.
“We believe Broadcom will continue to outperform the competition,” Rolland wrote. “We continue to have strong beliefs in AVGO’s franchise businesses, capital allocation and integration strategy.”
The analyst cited robust demand trends for Broadcom’s network chip and cybersecurity software businesses. The company “continues to demonstrate that economies of scale are a viable driver of profitability for those who can engage in the semiconductor industry,” he wrote.
Broadcom stock is up 2% over the last 12 months, compared to a 12% decline for the
iShares Semiconductors
Exchange Traded Fund (SOXX) that tracks the performance of the ICE Semiconductor Index.
Write to Tae Kim at tae.kim@barrons.com
https://www.barrons.com/articles/broadcom-reports-earnings-2d4e9394?siteid=yhoof2&yptr=yahoo Broadcom stock gains and solid forecasts
