Broadcom had a stellar 63% artificial intelligence (AI) revenue growth rate. This drastic jump further reflects the increasing appetite for more specialized chips, spurred largely by large CSPs. The company’s third-quarter financial results surpassed analysts’ expectations, showcasing a net income of $4.14 billion, equivalent to 85 cents per share. If true, that is an extraordinary about face. That came on the heels of a net loss of $1.88 billion last year, or 40 cents a share during that quarter.
Indeed, in Broadcom’s most recent quarter, their topline grew 22 percent year-over-year. Much of this stellar growth was driven by its creation of custom silicon for companies such as Google and other cloud providers. CEO Hock Tan, pictured below, believes that AI sales will amount to about $6.2 billion this quarter alone. This stunning total is more than the original projection of $5.1 billion. That total AI revenue was an incredible $5.2 billion for the quarter. This figure serves to underscore its smart strategic focus on the quickly evolving AI sector.
Much of Broadcom’s recent success in the booming AI market is due to its far-reaching product and services portfolio. The firm has been designing its own AI chips. Furthermore, it designs the networking hardware and software to connect thousands of these chips efficiently. This tight integration is key to delivering fast, intelligent AI application performance. It’s no surprise that Broadcom’s offerings in this area have captured huge market momentum.
That semiconductor solutions segment did well too, with semiconductor sales up 57% to $9.17 billion. This trend is a clear reflection of the booming demand for high-end computing solutions from industry, academia and government. Broadcom’s third-quarter revenue skyrocketed on the strength of its custom AI accelerators, networking components, and VMware software. These products have become indispensable overnight as businesses race to adopt new generative AI technologies.
On top of that last year, Broadcom was facing a monster one-time tax hit of $4.5 billion. This tax was intended to be triggered by the transfer of intangibles to the US. This provision weighed heavily on their financials but has now been addressed, leading to an easier year-over-year comparison this year particularly. Meanwhile, Broadcom expressed enthusiasm over the prospects of ongoing growth in AI revenue. They’ve been working on designing new AI chips themselves in conjunction with three large (as in the top three) cloud customers.
Investors have expressed enthusiasm regarding Broadcom’s advancements in AI technology, with some speculating that its custom chips may pose a threat to Nvidia’s dominant market share in the AI chip sector. Hock Tan is bullish on Broadcom’s AI development for 2024. His vision clearly reflects a fierce focus on innovation and moving aggressively into new markets.