This article first appeared on GuruFocus.
Broadcom (NASDAQ:AVGO) climbed 6% early Thursday after reporting fiscal first-quarter results that exceeded analyst expectations, driven by rising demand for artificial intelligence (AI) infrastructure.
The semiconductor and software company said AI-related revenue more than doubled year over year to $8.4 billion. Total sales rose 29% to $19.31 billion, slightly above analysts’ forecast of $19.26 billion. Adjusted earnings reached $2.05 per share, surpassing the $2.03 estimate.
CEO Hock Tan said demand for Broadcom’s custom AI chips and networking products is accelerating as hyperscalers and other technology firms expand AI capabilities. The company currently supports six key customers on AI processors, including Google, Meta (NASDAQ:META), Anthropic, and OpenAI, with Fujitsu and ByteDance expected to join. Tan projected AI chip revenue could exceed $100 billion by 2027.
Broadcom also highlighted growth in AI networking and infrastructure software. Networking products are expected to account for about 40% of AI revenue, while infrastructure software revenue is projected to rise 9% year over year to $7.2 billion. The company also launched a new share repurchase program of up to $10 billion.
