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Hock Tan, CEO of Broadcom.
Luke Jackson | Reuters
Broadcom reported better-than-expected fourth-quarter earnings on Thursday and said AI revenue for the year more than tripled.
Shares of the chipmaker rose after Broadcom CEO Hock Tan said the company is developing custom AI chips with three big cloud customers. Shares rose 13% in extended trading.
Here’s how Broadcom fared compared to LSEG consensus estimates for the quarter ending November 3:
- Earnings per share: $1.42, adjusted vs. $1.38 expected
- Revenue: $14.05 billion vs. $14.09 billion expected
Broadcom said it expects first-quarter revenue of about $14.6 billion, just above analysts’ average estimate of $14.57 billion. For the fourth quarter, year-over-year revenue increased 51% from $9.3 billion.
Net income in the fourth quarter was $4.32 billion, or 90 cents per share, up 23% from $3.52 billion, or 83 cents per share, in the same quarter a year earlier.
In its semiconductor solutions group, which includes the company’s artificial intelligence chips, revenue rose 12% to $8.23 billion from $8.03 billion a year ago.
Broadcom is seeing growing demand due to the rise of generative AI infrastructure. For the year, the company said AI revenue increased 220% to $12.2 billion. Part of that growth comes from Ethernet networking parts, which are used to link together thousands of AI chips.
“We see an opportunity in the next three years in AI,” Tan told investors on the earnings call. “Large targeted hyperscalers have begun their respective journeys to develop their own custom AI accelerators.”
Tan said Broadcom is currently developing AI chips with three very large customers, and expects each of them to deploy 1 million AI chips in networked clusters by 2027. Tan said the total market opportunity for its AI chips , which it calls XPU, as well as parts for AI networks could cost between $60 billion and $90 billion by 2027.
Broadcom said its infrastructure software division generated $5.82 billion in revenue during the quarter, nearly triple last year’s $1.96 billion. This includes a boost from the $69 billion acquisition of VMware, which was finished after the previous year’s quarter.
Broadcom said it would increase its quarterly dividend by 11% in fiscal 2025 to 59 cents per share.
LOOK: Broadcom Stock Rises on Earnings
