Trading at around $1,235, Broadcom stock has seen a 10.6% increase year-to-date. Despite a 12% decline following the company's strong fiscal Q1 results and improved AI revenue outlook for FY’24, Broadcom remains a key player in the tech industry.
In the first quarter, Broadcom's total revenue surged by 34% to $11.96 billion, surpassing estimates. The acquisition of VMware contributed $2.1 billion to this figure. Excluding VMware, revenue still saw an 11% increase. The company's free cash flow stood at $4.7 billion with a margin of 39%, while per-share earnings exceeded expectations at $10.99.
Within semiconductors, AI revenue soared by four times year-over-year to $2.3 billion, accounting for 31% of total semiconductor revenue. Networking revenue also saw a significant uptick, rising by 46% to $3.3 billion, driven by demand for Broadcom's AI accelerators from major hyperscaler customers.
Looking ahead, Broadcom anticipates a 35% growth in networking revenue for FY’24 and expects AI revenue to represent 35% of total semiconductor revenue. The company is focusing on expanding its AI accelerators and other cutting-edge technologies to meet the rising demand in the market.
Following the positive FQ1 report, several financial institutions raised their price targets for Broadcom, citing the strength of its AI business and potential synergies from the VMware acquisition. Broadcom's recent expansion of optical interconnect solutions for AI and machine learning applications further underscores its commitment to innovation and growth in the tech sector.
With the upcoming investor meeting, Broadcom Enabling AI in Infrastructure, the company aims to showcase its merchant silicon portfolio and discuss its strategic vision for the future. As Broadcom continues to drive advancements in AI technology and optical interconnects, it remains a prominent player in the evolving landscape of the tech industry.
