Broadcom (AVGO.US) gains 4% after beating analyst expectations in its latest earnings, reporting first-quarter revenue of $14.92 billion (vs. a $14.6 billion consensus) and projecting roughly $14.9 billion for the current quarter. AI-related spending was a key driver: management expects $4.4 billion in AI revenue this quarter, fueling investor optimism about ongoing growth in data center infrastructure. The strong results sent Broadcom shares up as much as 13% in premarket trading, reversing some of the year’s earlier losses.
Analysts across the board cited AI demand as the main tailwind for Broadcom’s semiconductor business. Morgan Stanley noted “40%+ quarter-over-quarter growth in Ethernet AI,” while JPMorgan saw “continued strong AI networking demand” that should persist throughout the year. Software revenue also exceeded expectations, at $6.7 billion (3.5% above the consensus), and total profit rose to $1.60 per share, beating estimates of $1.50.
Earnings Highlights
- First-Quarter Revenue: $14.92 billion, beating the consensus estimate of $14.6 billion and growing 25% year over year.
- Profit per Share: $1.60 (excluding some items), outpacing the estimated $1.50.
- Outlook for Current Quarter: Revenue projected at about $14.9 billion, above analyst forecasts.
- AI Revenues: Expected to reach $4.4 billion in the current quarter, driven by strong demand for AI-related networking and custom solutions.
- Software Division: Posted $6.7 billion in revenue—3.5% above the consensus estimate.
Market reaction
The share price is up 2% today, and in the initial reaction, gains reached as high as 13%. However, given the negative sentiment in the broader stock market, we are currently seeing a significant reduction in investor enthusiasm.
Source: xStation 5
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