By Asa Fitch
Broadcoms latest quarterly profits missed Wall Street forecasts on deal-related costs as strong demand for AI-related products boosted semiconductor sales.
The chip and software company said sales for its fiscal first quarter were $11.96 billion, up by 34% on a year before because of its acquisition of software-maker VMware. The company made $1.33 billion in net profit in the quarter, down from $3.78 billion the same period a year earlier and behind expectations in a FactSet survey of analysts.
Its stock fell 3% in after-hours trading.
Sales would have risen by only 11% for the quarter =excluding the VMware acquisition, CFO Kirsten Spears said in a statement.
The rise was driven by Broadcoms software segment and by demand for its networking chips, which help move data around in AI computation, CEO Hock Tan said. The company also helps big cloud-computing companies like Google to develop homegrown AI chips.
The company didnt give an outlook for the current quarter, but reiterated an earlier forecast of around $50 billion of sales in its fiscal year.
Broadcom is one of a handful of chip makers that are reaping rewards from the boom in AI, led by Nvidia ( The most advanced AI systems, including OpenAIs ChatGPT, require tens of thousands of advanced chips to create. Deploying AI services to millions upon millions of users is also computationally demanding, presenting another growing opportunity for chip-makers (
In December, Tan said generative AI revenue was close to $1.5 billion in the quarter that ended in October, or about 20% of its overall revenue from chips.
Broadcoms stock has more than doubled in the past year, in part from the AI boost. The company is the second-largest U.S.-listed chip-maker by market capitalization, although more than a third of its revenue comes from a growing software business.
The company added to its software investments last year by closing the $69 billion acquisition of VMware ( one of the largest-ever tech deals. VMware supplies software thats ubiquitous in data centers.