Broadcom Inc, a chip company seeking to compete with Nvidia Corp in the artificial intelligence (AI) market, gave a strong revenue forecast for the current quarter, signaling that demand for AI data center equipment is fueling growth.
Sales would be about US$19.1 billion in the fiscal first quarter, which ends Feb. 1, the company said in a statement on Thursday.
Analysts had estimated US$18.5 billion on average, according to data compiled by Bloomberg.
Photo: REUTERS
The company also boosted its quarterly dividend 10 percent to US$0.65 a share.
Broadcom has benefited from demand for its custom chips as part of a massive data center build-out, giving it a growing piece of an industry dominated by Nvidia.
“We see the momentum continuing in Q1 and expect AI semiconductor revenue to double year-over-year to US$8.2 billion,” CEO Hock Tan (陳福陽) said in the statement.
Much of the recent buzz around Broadcom stems from its ties to some of the biggest AI model providers. ChatGPT maker OpenAI signed a pact with Broadcom for its own AI chip designs, while Anthropic agreed to use tens of billions of dollars’ worth of computing services based on Alphabet Inc’s Google Cloud tensor processing units. The latter components also rely on Broadcom designs, helping fuel investor enthusiasm about the chipmaker’s AI prospects.
Broadcom shares rose about 3 percent in extended trading after the results were posted. The shares had earlier closed at US$406.37 in New York, leaving them up 75 percent this year.
The Palo Alto, California-based company has a wide-ranging lineup that spans communications chips, networking components and software.
As part of its bid to generate greater revenue from AI, Broadcom has been updating its networking equipment to move data more quickly inside and between data centers. With AI models getting more complex, the ability to connect chips, racks of servers and whole buildings is growing more critical.
In the fiscal fourth quarter, which ended Tuesday last week, Broadcom posted sales of US$18 billion. Earnings rose to US$1.95 a share, excluding some items. Analysts had estimated revenue of US$17.5 billion and profit of US$1.87 a share.
As part of Broadcom’s OpenAI deal, announced in October, the ChatGPT maker would use custom chips and networking components to help power its AI services.
The deal would bring in additional revenue to Broadcom’s custom chip unit and provide deeper access to the booming AI market. Although the company has already seen its revenue from AI computing climb, Broadcom has remained in the shadow of Nvidia, the top seller of AI processors.
Tan stands to benefit handsomely if that business meets long-term financial goals. The executive is due to get 610,521 shares of Broadcom if AI revenue hits US$90 billion by fiscal 2030. If the sales reach US$120 billion, Tan is poised for 300 percent of the payout.
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