During the Digital X event in Cologne, Germany, on September 13, 2022, Broadcom's CEO, Hock Tan, addressed attendees but subsequently left investors feeling disappointed as the company reported fiscal second-quarter earnings that fell short of expectations.
In after-hours trading, Broadcom's stock took a hit, particularly as Tan did not choose to raise the ambitious full-year target of $100 billion in sales for artificial intelligence chips.
When compared to consensus estimates from LSEG, the results were as follows:
- Adjusted earnings per share came in at $2.44, slightly above the anticipated $2.40. - Revenue reached $22.19 billion, missing the estimated $22.27 billion.
Broadcom, however, did note that revenue surged by 48% year-over-year, up from $15 billion in the same quarter last year. This growth is largely attributed to the rising demand for custom AI chips, specifically Google's tensor processing units.
For the upcoming quarter, Broadcom projects revenue will be around $29.4 billion, surpassing Wall Street's expectation of $28.53 billion.
As of the end of the previous trading day, Broadcom shares have risen nearly 40% year-to-date, outperforming the Nasdaq's 16% gain. Since the close of 2022, the stock has increased nearly nine times, fueled by the generative AI wave initiated by ChatGPT.
Net income for the quarter climbed to $9.31 billion, equating to $1.91 per share, representing an impressive 88% increase from $4.97 billion, or $1.03 per share, in the same period last year. It's worth noting that adjusted earnings exclude stock-based compensation and tax adjustments.
Broadcom plays a vital role in assisting technology firms with custom chip development, providing important intellectual property and other necessary technologies for AI chips. This positioning has garnered considerable investor interest, especially as major cloud service providers seek to create their own customized chip solutions. In December, Tan revealed that Anthropic had made a substantial order for $10 billion worth of AI chips.
