(Reuters) – Chipmaker Broadcom raised its annual revenue forecast on Wednesday and announced a stock split, after a big stock rally, with Wall Street betting big on devices powered by generative artificial intelligence technology.
Shares of the Palo Alto, California-based company rose 12% in extended trading. The stock is up more than 30% so far this year, after nearly doubling in 2023.
The company will conduct a 10-for-1 forward stock split, in an effort to make its shares more accessible to retail investors. The revised trading is expected to begin on July 15.
Broadcom makes advanced networking chips that help transmit the vast amount of data used by AI applications like OpenAI’s ChatGPT, making it one of the beneficiaries of companies investing heavily in the burgeoning technology.
Broadcom reported revenue of $3.1 billion from AI products during the second quarter.
The custom chip unit has also attracted orders from major cloud providers looking to reduce their reliance on expensive Nvidia processors.
Revenue from its semiconductor solutions segment, which includes the company’s networks and custom chips, rose about 6% to $7.20 billion in the quarter, compared to Visible Alpha’s estimate of $7.12 billion.
Broadcom said in March it had added a third customer for its custom AI chip business. The so-called “hyperscalers” that make custom chips are widely considered by analysts to be Google and Meta.
The company’s infrastructure software segment revenues more than doubled, as it expanded its software portfolio through the acquisition of leading software providers such as VMware.
Broadcom now expects full-year 2024 revenue to be about $51 billion, including VMware’s contribution, versus its previous forecast of about $50 billion. Analysts on average estimate $50.42 billion, according to LSEG data.
It also raised its annual core earnings forecast and exceeded analysts’ estimates for second-quarter profits and revenues.
(Reporting by Arshiya Bajwa in Bengaluru; Editing by Shilpi Majumdar)
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