Investing.com – Broadcom on Thursday provided upbeat revenue guidance for the current quarter and forecast booming demand for custom AI chips in the next few years, sending its shares higher in extended trading.
Shares of Broadcom Inc (NASDAQ:) rose more than 14% in pre-market trading on Friday.
For the three months ended November 3, the chipmaker reported earnings per share (EPS) of $1.42 on revenue of $14.05 billion. Analysts surveyed by Investing.com expected earnings per share of $1.39 on revenue of $14.07 billion.
Semiconductor solutions, its core business, jumped 12% to $8.23 billion, while infrastructure software rose 196% to $5.82 billion.
For 2024, semiconductor revenue reached “a record $30.1 billion driven by artificial intelligence revenue of $12.2 billion,” the company said. “AI revenues that grew 220 percent year-over-year were driven by our leading AI XPUs and Ethernet networking portfolio,” she added.
Looking ahead, the chipmaker said it expects first-quarter revenue to reach $14.6 billion, higher than the expected $14.55 billion.
But the key takeaway from the earnings call, according to Jefferies analysts, was management's growing confidence that the serviceable market (SAM) for its three AI ASIC clients is expected to reach $60-90 billion by fiscal 2027 (January), based on its roadmaps. Clients and their plans.
“This would be if all three switch to ASICs versus GPUs for the training sets, which is not a guarantee, but highlights the size of the ASIC opportunity. SAM will expand further if it wins additional hyperscale customers,” the analysts note. .
“Overall, we have handled the near-term situation very nicely, but we expect investors to return to the name, given the better near-term clarity on AI revenues and the significant long-term potential of 1M xPU clusters.” He added.
Jefferies raised its price target on AVGO from $205 to $225.
Separately, Cantor Fitzgerald analysts raised their price target to $250 from $225, reiterating Broadcom as a top pick.
“It is abundantly clear to us that Broadcom is a clear beneficiary of AI with a strong technology roadmap ahead and which should continue to deliver strong earnings growth,” the company wrote.
Yassin Ibrahim contributed to this report.
