Palo Alto-based chipmaker Broadcom reported second fiscal quarter earnings on Wednesday that surpassed analysts' estimates — and announced a 10-for-1 stock split due to take place in one month's time.
Broadcom shares are set to begin trading on a split-adjusted basis on July 15.
Here are the results compared to LSEG consensus estimates for the quarter ending in May:
Broadcom forecasts approximately $51 billion in sales for its fiscal 2024 year, surpassing the previous forecast and slightly above the consensus expectation of $50.42 billion.
The company reported a net income of $2.12 billion for the quarter, or $4.42 per share, compared to $3.48 billion, or $8.15 per share, in the same period last year.
Chief Financial Officer Kirsten Spears said in a release that the Broadcom stock split will “make ownership of Broadcom [shares] more accessible to investors and employees.”
The company’s shares, which trade on the Nasdaq under the ticker AVGO, are up 75% over the past year. They closed Wednesday’s session up 2.4% at $1,495.51.
The stock ran up further in the extended session, gaining more than 14%.
At the time of writing on Thursday, June 13, AVGO stock was up 14.7% in early trading at $1,715.68. If the 10-for-1 Broadcom stock split was to take place today, the company’s shares would be valued at $171.56. AVGO is up over 54% year-to-date.
Nvidia stock began trading on a split-adjusted basis earlier this week. NVDA shares were up 3.4% on Thursday at $129.50 and are up over 161% so far this year.
The U.S. benchmark S&P 500 index, in contrast, has risen by just under 14% year-to-date, while the Nasdaq Composite is up 18.13% in the same timeframe.
Broadcom is benefiting from the artificial intelligence (AI) boom, with $3.1 billion in sales during the quarter attributed to AI product revenue. Broadcom collaborates with Google, which partially designs its own AI chip, the TPU.
Broadcom CEO Hock Tan said on the earnings call:
“Talking of AI accelerators, you may know our hyperscale customers are accelerating their investments to scale up the performance of these clusters. And to that end, we have just been awarded the next-generation custom AI accelerators for these hyperscale customers of ours”.
The company also said that revenue from VMware, an enterprise software company Broadcom acquired for $69 billion late last year, also contributed to the chipmaker’s sales growth and forecast for the remainder of 2023.
The company’s overall revenue increased by 43% year-over-year for the quarter. Excluding VMware sales, it would have been up by 12% on an annual basis, Broadcom said.
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