Fueled by gains from the exponential growth of demand for artificial intelligence-related chips, Broadcom Inc. (Nasdaq: AVGO) reported better-than-anticipated fiscal 2024 second-quarter earnings and revenues. The company also announced a 10:1 stock split while upwardly revising its FY 2024 revenue outlook. The stock of Broadcom ended Friday’s trading session at $1,735.04, an increase of $56.05, or 3.34%, from the prior close.
The Palo Alto, California-based company reported second-quarter revenues of $12.49 billion, up 43% from $8.73 billion in the comparable quarter of fiscal 2023.
The company reported that revenue from VMware, the enterprise software firm bought for $69 billion in the final quarter of 2023, significantly fueled its revenue growth and optimistic forecast for the remainder of 2024. Excluding VMware sales, according to Broadcom, the year-over-year revenue growth would have been 12%.
The company revealed that its AI-related offerings generated revenues of $3.10 billion.
For the second quarter, which ended May 5, 2024, Broadcom posted net income of $2.12 billion, or $4.42 per share, down from $3.48 billion, or $8.15 per share, in the quarter that ended on April 30, 2023.
Excluding amortization of acquisition-related intangible assets, stock-based compensation expense, restructuring charges, and acquisition-related costs, among others, Broadcom recorded 2Q 2024 non-GAAP net income of $5.39 billion, or $10.96 per share, an increase from $4.49 billion, or $10.32 per share, in 2Q 2023.
Analysts polled by LSEG expected Broadcom to report earnings of $10.84 per share with revenues totaling $12.03 billion.
Commenting on the results, Hock Tan, President and CEO of Broadcom Inc., stated “Broadcom’s second quarter results were once again driven by AI demand and VMware. Revenue from our AI products was a record $3.1 billion during the quarter. Infrastructure software revenue accelerated as more enterprises adopted the VMware software stack to build their own private clouds.”
Segment wise:
- Semiconductor solutions revenue surged 58% y-o-y to $7.20 billion.
- Infrastructure software revenue was $5.29 billion, an increase of 42% from last year.
Looking ahead, Broadcom now projects FY 2024 revenues of $51 billion, an upward revision from the previous revenue guidance level of $50 billion and slightly above Wall Street estimates of $50.42 billion.
As mentioned earlier, the company also announced a 10-for-1 stock split. Starting July 15, Broadcom’s shares will start trading on a split-adjusted basis.
Following the results, in a note to investors, Goldman Sachs analysts upwardly revised Broadcom’s 12-month price target to $1,850 from the $1,550 issued earlier. Similarly, analysts at Bank of America reaffirmed a buy rating for the stock.
The quarterly earnings beat, an upward revision of the FY 2024 revenue outlook, and an updated price target by Goldman Sachs are expected to keep Broadcom’s stock slightly bullish in the near term.
The historical price chart shows that Broadcom’s stock is on the rise following a breakout from the ascending triangle pattern. It is currently trading above its 50-day moving average, with the stochastic indicator indicating bullish momentum. Consequently, we expect Broadcom’s stock to continue its upward trend over the next few trading sessions.
Disclaimer: Any financial trading analysis offered here is our opinion and is not intended as advice or direction for investors. We cannot guarantee the success of any trades made as a consequence of this article, and we encourage traders to incorporate a strong money management strategy to limit losses when they enter the markets. Please use this article as part of your own research before formulating strategies prior to trading.
