Investing.com – Broadcom on Thursday delivered upbeat income steerage for the present quarter and forecasted booming demand for its customized AI chips within the subsequent few years, sending its shares hovering in prolonged buying and selling.
Broadcom Inc (NASDAQ:) shares surged greater than 14% in premarket buying and selling Friday.
For 3 months ended Nov. 3, the chipmaker introduced earnings per share (EPS) of $1.42 on income of $14.05 billion. Analysts polled by Investing.com anticipated EPS of $1.39 on income of $14.07 billion.
Semiconductor options, its core enterprise, jumped 12% to $8.23B, whereas infrastructure software program rose 196% to $5.82B.
For 2024, semiconductor income was a “file $30.1 billion pushed by AI income of $12.2 billion,” the corporate stated. “AI income which grew 220 p.c year-on-year was pushed by our main AI XPUs and Ethernet networking portfolio,” it added.
Trying forward, the chipmaker stated it expects Q1 income of $14.6B, above consensus of $14.55B.
However the important thing takeaway from the earnings name, in line with Jefferies analysts, was the administration’s rising confidence that the Serviceable Addressable Market (SAM) for his or her three AI ASIC clients is projected to achieve $60-90 billion by fiscal yr 2027 (January), primarily based on buyer roadmaps and plans.
“This could be if all 3 shift to ASICs vs GPUs for coaching clusters, which isn’t a assure, however it does spotlight the dimensions of the ASIC alternative. The SAM would broaden additional in the event that they win the two further hyperscale clients,” analysts notice.
“Total, we obtained a bit too cute on the near-term positioning, however count on traders to come back again to the identify, given the higher near-term readability on AI income and the substantial long-term potential of 1M xPU clusters,” they added.
Jefferies lifted the value goal on AVGO from $205 to $225.
Individually, Cantor Fitzgerald analysts lifted their goal value to $250 from $225, and reiterated Broadcom as their Prime Choose.
“It’s crystal clear to us that Broadcom is a transparent beneficiary of AI with a robust expertise roadmap forward that ought to proceed to ship sturdy earnings progress,” the agency wrote.
Yasin Ebrahim contributed to this report.