Broadcom Again Surges with Strong AI Chip Demand Forecast

BENGALURU, India — Broadcom on Thursday announced forecasted revenue for the second quarter that exceeds Wall Street expectations, driven by strong demand for its custom artificial intelligence (AI) chips as companies seek cost-effective solutions for processing big data.

The semiconductor giant anticipates revenue of approximately $14.90 billion, surpassing the analysts’ estimate of $14.76 billion, according to data compiled by LSEG. Following the announcement, Broadcom shares surged more than 8% in after-hours trading.

Broadcom CEO Hock Tan attributed the optimistic outlook to heightened demand for AI semiconductors from hyperscale customers. He stated, “We expect revenue of $4.4 billion in the second quarter for our AI semiconductors, as clients rapidly expand their AI infrastructure.”

The surge in demand is particularly notable as many companies are seeking alternatives to market leader Nvidia, whose costly processors dominate the market. Despite the fierce competition from Nvidia’s Infiniband products, Broadcom is well-positioned as a top provider of advanced networking equipment crucial for AI data centers.

Analysts predict that Broadcom’s growth will be bolstered by larger tech companies transitioning from off-the-shelf chips to custom processors in response to more complex and tailored computing requirements for AI tasks.

In its earnings report for the first quarter, Broadcom reported revenue of $14.92 billion, exceeding the estimated forecast of $14.61 billion. The company also registered a remarkable growth in AI revenue, which soared over 77% to $4.1 billion, thanks to the strong adoption of its custom-made accelerators.

Moreover, Broadcom’s revenue from its infrastructure software segment rose by more than 47% to $6.70 billion, outperforming analysts’ expectations of $6.49 billion.

“As the demand for AI technology continues to escalate, we are excited about the role Broadcom will play in meeting that need,” added Tan.