Broadcom (AVGO) Q3 2024 Earnings Report

Broadcom It reported better-than-expected fourth-quarter earnings on Thursday and said annual artificial intelligence revenue tripled.

The chipmaker’s shares rose in extended trading, rising more than 9 percent after Broadcom CEO Hock Tan said the company was developing custom AI chips with three major cloud clients.

Here’s how Broadcom fared against LSEG’s consensus estimates for the quarter ended Nov. 3:

• Earnings per share: $1.42, adjusted and expected $1.38
• Income: $14.05 billion vs $14.09 billion expected

Broadcom said it expects first-quarter revenue of about $14.6 billion, ahead of the average analyst estimate of $14.57 billion. In the fourth quarter, year-over-year revenue increased 51% to $9.3 billion.

Fourth-quarter net income was $4.32 billion, or 90 cents per share, up 23% from $3.52 billion, or 83 cents per share, in the same quarter a year earlier.

In its semiconductor solutions group, which includes the company’s artificial intelligence chips, revenue increased 12% to $8.23 billion from $8.03 billion a year ago.

Broadcom is seeing increasing demand from the AI ​​generation infrastructure boom. For the year, the company said AI revenue rose 220% to $12.2 billion. Part of that growth comes from Ethernet network sections, which are used to connect thousands of AI chips.

“We see an opportunity in AI over the next three years,” Broadcom CEO Hock Tan told investors on the earnings call. “Mass specific hyperscalers have begun their respective journeys to develop their own custom AI accelerators.”

Tan said Broadcom was currently developing AI chips with three major customers, each of which expects to deploy 1 million AI chips in network clusters by 2027. Tan said the full market opportunity for his AI chips, which he calls XPU. , as well as parts for the AI ​​network could be worth between $60 billion and $90 billion by 2027.

Broadcom said its infrastructure software division earned $5.82 billion in the quarter, nearly triple the $1.96 billion a year ago. This includes the impetus for the $69 billion acquisition of VMware, which is completed after the quarter last year.

Broadcom said it would increase its quarterly dividend by 11% in fiscal 2025 to 59 cents per share.