Broadcom CEO Hock Tan speaks at the Digital X event in Cologne, Germany on September 13, 2022.
Ying Tan | Null Photo | Getty Images
broadcom reported lower-than-expected earnings in its second quarter earnings report.
Shares fell in after-hours trading, falling further after CEO Hock Tan failed to raise the company’s full-year target for artificial intelligence chip sales of $100 billion.
Here’s a comparison of chipmaker results and LSEG’s consensus estimates:
Earnings per share: Adjusted $2.44 ($2.40 est.) Revenue: $22.19 billion ($22.27 billion est.)
Broadcom said in a statement that revenue increased 48% from $15 billion in the same period last year. Sales have increased in recent quarters, driven by demand for custom AI chips, including: googletensor processing unit.
The company said sales for the current quarter will be about $29.4 billion, compared to Wall Street analysts’ expectations of $28.53 billion.
Broadcom stock has risen nearly 40% since the beginning of the year as of Wednesday’s close, outpacing the Nasdaq’s 16% rise. The stock has increased nearly nine times since the end of 2022, when ChatGPT sparked the AI boom.
Net income was $9.31 billion, or $1.91 per share, an 88% increase from $4.97 billion, or $1.03 per share, in the year-ago period. Adjusted earnings exclude stock-based compensation and tax adjustments.
Broadcom helps other technology companies build custom chip designs and provides the intellectual property and other critical technology needed for AI chips. Investor attention is growing as cloud giants design their own custom chips. In December, Tan said Anthropic had placed a $10 billion order for AI chips.
Tan said during an earnings call with analysts that Broadcom includes Anthropic, Google, meta OpenAI is driving the company’s AI revenue growth. However, Tan did not raise the company’s forecast for AI semiconductor sales in 2026.
“We expect this momentum to continue into fiscal 2027, reiterating that our AI semiconductor revenue outlook is over $100 billion,” Tan said.
Tan also said the company would provide “chips only” rather than the fully integrated AI system that Broadcom had previously said it would provide to customers.
AI revenue more than doubled on an annual basis to $10.8 billion in the second quarter. Tan attributes this to the company’s custom AI chips and other components needed to network them. He said he expects the company’s AI revenue to triple to $16 billion this quarter.
“The bookings that are coming are not for immediate delivery,” Mr Tan said. “While that’s what they want, they all accept the reality that quite a few other things need to fall into place before it can happen.”
Broadcom reported $15.1 billion in revenue from its chip sales division, Semiconductor Solutions. This includes AI accelerators and networking, as well as networking components and Wi-Fi chips. This revenue exceeded the $14.72 billion estimated by Street accounts.
The company also sells enterprise software, much of which it acquired through its acquisition of VMWare in 2023. Broadcom reported infrastructure software revenue of $7.18 billion, up 9% on a yearly basis but falling short of the $7.32 billion in revenue expected by analysts surveyed by Street Account.
Spotlight: Meta and Broadcom strengthen AI chip partnership through 2029
