Broadcom soars after earnings beat, sunny revenue guidance

Broadcom reported better-than-expected profits and a revenue outlook to match, sending shares sharply higher in after-hours trading.

For its fiscal first quarter, the chip designer booked earnings per share of $1.60, $0.10 above the consensus estimate, along with a positive surprise for its adjusted gross margin of 79.1%. (Nvidia, on the other hand, is showing signs of softness in this metric.)

AI sales were big for Broadcom in the quarter: at $4.1 billion, this trounced the consensus estimate of $3.73 billion by about 10%.

“We expect continued strength in AI semiconductor revenue of $4.4 billion in Q2, as hyperscale partners continue to invest in AI XPUs and connectivity solutions for AI data centers,” CEO and President Hock Tan said.

But with the market taking a what-have-you-done-for-me-lately approach to AI names, it’s the second-quarter guidance that’s really fueling a bid for the stock. Broadcom anticipates generating about $14.9 billion in revenue versus the consensus estimate of $14.6 billion. The adjusted EBITDA guidance of about $9.93 billion for Q2 also came in $200 million above the Street’s expectations.

Shares had sold off hard on Thursday ahead of the report, as Marvell Technologies — which also sells customized advanced semiconductors to the hyperscalers — posted underwhelming guidance after the close on Wednesday.

It’s been a while since we’ve seen an unabashedly positive market reaction to semiconductor earnings!