Broadcom Inc., a chip supplier for Apple Inc. and other big tech companies, predicted that AI spending would fuel growth more quickly than expected this year, even as sluggish demand in other areas weighs on semiconductor sales.
The company's semiconductor division posted revenue of $7.39 billion in the fiscal first quarter, Broadcom said Thursday, missing the $7.7 billion projected by analysts. Still, the chipmaker remains on track for $50 billion in sales during fiscal 2024, which ends in October. That's in line with its previous forecast.
Though an artificial intelligence boom is fueling demand for Broadcom equipment, the company is contending with slower sales in some segments, such as telecommunications. That's hurting its chip business. Broadcom's infrastructure software sales, meanwhile, beat analysts' estimates.
The company's stock, which had been up 26% this year, fell about 1% in extended trading following the announcement. Shares of fellow chipmaker Marvell Technology Inc. also slid in after hours, hurt by a weak forecast. It too has been seen as a beneficiary of AI spending.
Speaking on a conference call with analysts, Chief Executive Officer Hock Tan said AI spending would strengthen this year. The Palo Alto, California-based company now expects the demand to account for 35% of its semiconductor revenue in fiscal 2024, up from a previous forecast of 25%.
Nvidia Corp.'s stratospheric rise in the past year has sent investors looking for other companies poised to get an AI windfall. Broadcom doesn't make Nvidia-style chips — ones used to train the large language models that power AI tools — but it does supply vital networking components and handles custom chip design work. That makes it integral to the giant data centers that are processing AI workloads.
Despite missing estimates for chip revenue, Tan said demand was strong for its networking products from AI data centers and that large cloud computing providers are clamoring for its custom artificial
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