Broadcom surges in strong revenue and AI outlook

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Broadcom shares surged in after-hours trading on Thursday as chip designers announced their confidence outlook for better revenue than expected and artificial intelligence.

The company, which designs custom AI chips and infrastructure for the largest tech companies, provided an encouraging message to investors after sector stocks fell Thursday during a wider pullback in the market.

Broadcom reported revenues of $14.9 billion in the first quarter, and it fell below Wall Street expectations, saying it expects roughly the same revenue for the current quarter. Profit for this period was $5.5 billion, up four times from $1.3 billion a year ago.

For the current quarter, Broadcom said it expects $4.4 billion in AI semiconductor revenues. As so-called hyperscalars continue to invest in custom AI chips, they can be used as an alternative to Nvidia’s market-leading graphics processing units.

US stocks fell Thursday in the high-tech NASDAQ Composite, which fell 2.6%. Broadcom’s shares rose 18% in after-hours trading after suffering with other sectors during regular sessions.

Shares in competitor Marvell Technology on Thursday plummeted almost 20% after a disappointing result on Wednesday. Analysts said they were unable to meet the highest expectations of companies that will benefit from billions of dollars in custom chips from Amazon, Microsoft, Google, Meta and others.

Meanwhile, Nvidia’s shares have fallen by about 20% since the beginning of the year. Semiconductors face uncertainty regarding the potential impact of new tariffs and export controls from the Donald Trump administration.

Broadcom CEO Hock Tan said Thursday that the emergence of generator AI is “really accelerating the development of semiconductor technology.”

Broadcom’s market capitalization temporarily surged above $10 in December as Tan forecasts billions of dollars in AI revenues through 2027, up 24% in a day. It has now returned to about $841 billion.

Daniel Newman, chief executive of research firm The Futurum Group, described Broadcom as the “sleeping giant” of AI, highlighting the diversification of software and semiconductors as well as the long-term bet on “networking,” a technology that connects chips within data centers.

Broadcom doesn’t name the Chip client, but analysts say they’ve worked with Google, Meta and the parent bytedance of Tiktok, and others to create custom AI processors.