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Broadcom Shares Dip Despite Strong Fiscal Q1 Earnings in AI Sector
Broadcom’s stock saw a slight decline in early Friday trading following the release of its impressive fiscal first-quarter earnings, highlighting the company’s growing focus on AI-related technologies.
The company’s shares have surged over 100% since this time last year, gaining nearly $400 billion in market value. This surge reflects investors’ reevaluation of companies within the artificial-intelligence value chain, driven by the widespread interest in AI technologies.
Broadcom, headquartered in Palo Alto, California, plays a crucial role in the AI landscape, where large data models rely on interconnected networks, or nodes, to facilitate the rapid transfer of information. The company’s application-specific integrated circuits (ASIC chips) enable these networks to communicate effectively, reduce congestion, and enhance the speed and reliability of data processing.
CEO Hock Tan indicated that AI-related sales are expected to account for approximately 35% of Broadcom’s total chip sales, up from the previous estimate of 30%.
Broadcom reported a substantial increase in AI revenue, which quadrupled to around $2.3 billion in the fiscal first quarter. Adjusted earnings per share rose by 6.4% year-over-year to $10.99, while overall revenue surged by 34% to nearly $12 billion, surpassing analysts’ expectations.
Looking ahead, Tan projected that Broadcom’s AI-related revenue for the fiscal year would reach approximately $10 billion, marking a 33% increase from previous forecasts. He emphasized the importance of two key segments in the generative-AI market: hyperscalers like Meta Platforms and Alphabet, as well as smaller businesses seeking to develop AI models.
