Broadcom expects AI revenue to triple as demand soars

Broadcom reported fiscal second-quarter results showing net income of $9.31 billion, an 88 percent increase from the same period last year, as the chipmaker continues to benefit from surging demand for its custom AI processors. Revenue rose 48 percent to $22.19 billion, slightly missing Wall Street estimates of $22.27 billion, while adjusted earnings per share came in at $2.44, beating expectations of $2.40. Shares fell more than 2 percent in extended trading following the report. The company's AI-related semiconductor revenue more than doubled year-over-year to $10.8 billion in the quarter, driven by custom chips built for major cloud providers including Google, Meta, Amazon, and Microsoft. CEO Hock Tan said the company expected AI revenue to triple to $16 billion in the current quarter, representing growth of more than 200 percent year-over-year. Broadcom has positioned itself as a key alternative to Nvidia, which dominates the AI chip market, by offering custom processors that help hyperscalers reduce costs and personalize workloads. For the third quarter, Broadcom forecast revenue of approximately $29.4 billion, well above analysts' average estimate of $28.54 billion. The company also reported $15.1 billion in semiconductor solutions revenue, topping expectations, though infrastructure software revenue of $7.18 billion fell short of the $7.32 billion analysts had anticipated. Broadcom shares have gained nearly 40 percent this year, significantly outperforming the Nasdaq's 16 percent gain, and have multiplied almost ninefold since the end of 2022 when the generative AI boom began.