Broadcom Inc (AVGO) delivered impressive results for the third quarter ended August 4th, exceeding revenue expectations with its infrastructure solutions but falling short on the semiconductor side. This performance underscores Broadcom’s strategic shift towards the burgeoning AI market, highlighted by its recent acquisition of VMware and its contributions to major tech giants like Google and Apple.
The company reported a remarkable 47% year-over-year revenue growth, reaching $13.07 billion. This impressive figure surpassed analyst expectations, primarily driven by the significant contributions from the VMware deal, which closed in November. Excluding VMware’s impact, revenue growth was a more modest 4%.
Broadcom’s semiconductor solutions division, which generated $7.27 billion in revenue, experienced a 5% year-over-year growth. However, this fell short of analysts’ estimates of $7.42 billion. Meanwhile, infrastructure solutions, boosted by VMware, saw a phenomenal 200% revenue growth, exceeding expectations.
Despite the revenue growth, Broadcom reported a net loss of $1.88 billion, or 40 cents per share, for the quarter. However, adjusted earnings reached $1.24, exceeding analysts’ projections. Looking forward, the company guided for revenue of $14 billion for the current quarter.
Broadcom is making significant strides in the AI landscape, fueled by its ethernet networking and custom accelerators for AI data centers. The company raised its full-year AI revenue forecast to $12 billion, reflecting strong demand for its AI parts and custom chips. This underscores its commitment to becoming a major player in the AI infrastructure, as evidenced by its work on Google’s TPU chip and Apple’s AI training efforts.
Apple’s adoption of Broadcom’s chips for its AI training work is particularly noteworthy, as it signals a move away from Nvidia, the dominant force in this market. Nvidia’s GPUs, while powerful, come with a hefty price tag, which has prompted some companies to explore alternative solutions. This shift in the AI chip landscape opens up opportunities for players like Broadcom to play a more prominent role.
Broadcom’s success in AI infrastructure solutions highlights its strategic focus and its ability to capitalize on emerging technologies. As the AI market continues to evolve, the company’s contributions are likely to become even more significant.
