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Broadcom shares surged in after-hours trading on Thursday as the chip designer announced better than expected revenue and a confident outlook around artificial intelligence.
The company, which designs custom AI chips and infrastructure for the biggest tech companies, offered a reassuring message to investors after tech stocks fell on Thursday during a broader pullback in the market.
Broadcom reported first-quarter revenue of $14.9bn, and said it was expecting roughly the same revenue for the current quarter, beating Wall Street expectations. Profits in the period were $5.5bn, a fourfold increase from $1.3bn a year ago.
For the current quarter the company said it expected $4.4bn in AI semiconductor revenue thanks to so-called ‘hyperscalers’ continuing to invest in their custom AI chips — which can be used as an alternative to Nvidia’s market-leading graphics processing units.
US stocks fell on Thursday with the tech-heavy Nasdaq Composite down 2.6 per cent. Broadcom shares rose as much as 18 per cent in after-hours trading after suffering with the rest of the sector during the regular session.
Shares of competitor Marvell Technology on Thursday plummeted almost 20 per cent after disappointing results on Wednesday. Analysts said it failed to meet the highest expectations for companies benefiting from billions of dollars in investments in custom chips by the likes of Amazon, Microsoft, Google and Meta.
Nvidia shares are meanwhile down about 20 per cent since the start of the year. Semiconductors are facing uncertainty around the potential impact of new tariffs and export controls from Donald Trump’s administration.
Broadcom chief executive Hock Tan on Thursday said the advent of generative AI was “really accelerating the development of semiconductor technology”, including specialist chips of the kind the company co-designs with customers, known as ‘XPUs.’
Broadcom’s market capitalisation temporarily surged past $1tn in December as Tan forecast tens of billions of dollars in AI revenue into 2027, jumping 24 per cent in a single day. It has now fallen back to about $841bn.
Daniel Newman, chief executive of research firm The Futurum Group, described Broadcom as a “sleeping giant” in AI, highlighting its diversification across software and semiconductors and its long-term bet on ‘networking’, the technology that connects chips inside a data centre.
Broadcom does not name its chip clients, but analysts say it has worked with the likes of Google, Meta and TikTok parent ByteDance to make custom AI processors.
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