Chipmaker and infrastructure software provider Broadcom late Wednesday beat Wall Street's targets for its fiscal second quarter. The company also announced a 10-for-1 stock split. Broadcom stock jumped in extended trading.
The Palo Alto, Calif.-based company earned an adjusted $10.96 a share on sales of $12.49 billion in the quarter ended May 5. Analysts polled by FactSet had expected Broadcom to earn an adjusted $10.85 a share on sales of $12.06 billion. On a year-over-year basis, Broadcom earnings rose 6%. Sales surged 43% thanks to its acquisition of VMware.
Broadcom's sales excluding VMware were up 12% year over year.
"Broadcom's second-quarter results were once again driven by AI demand and VMware," Chief Executive Hock Tan said in a news release. "Revenue from our AI products was a record $3.1 billion during the quarter. Infrastructure software revenue accelerated as more enterprises adopted the VMware software stack to build their own private clouds."
Broadcom also raised its sales guidance for the full fiscal year ending Nov. 3 to $51 billion, up 42% from the prior year. It had previously forecast sales of $50 billion. Analysts had been modeling $50.58 billion.
AVGO Stock Jumps After Report
In after-hours trading on the stock market today, AVGO stock rose 12% to 1,675. During the regular session, AVGO stock advanced 2.4% to close at 1,495.51.
Broadcom expects to begin trading on a split-adjusted basis on July 15.
Chief Financial Officer Kirsten Spears said the stock split will "make ownership of Broadcom stock more accessible to investors and employees."
Broadcom makes a broad range of semiconductor, enterprise software and security solutions. Its product portfolio covers such areas as data centers, networking, broadband, wireless, storage, industrial and enterprise software.
Broadcom Stock On Two IBD Lists
Semiconductor products accounted for 58% of Broadcom's revenue in the second quarter. Infrastructure software contributed 42% of sales. Chip sales rose 6% to $7.2 billion while infrastructure software sales jumped 175% to nearly $5.3 billion.
Broadcom makes custom data-center AI processors for Alphabet's Google and Facebook parent Meta Platforms. It also makes networking and switching chips for all the major cloud computing infrastructure providers.
Morgan Stanley analyst Joseph Moore called Broadcom "one of the strongest AI plays" in the semiconductor sector in a report on Sunday. He rates AVGO stock as overweight with a price target of 1,658.
AVGO stock is on two IBD lists: Big Cap 20 and Tech Leaders.
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