Broadcom, one of the largest suppliers of semiconductor components in the world, this week reported its results for the third fiscal quarter, and published a forecast according to which it will earn $12 billion in sales of components for artificial intelligence systems for the entire fiscal year.
Image source: Broadcom
It is noteworthy that such statements could not encourage investors, and Broadcom shares rushed down 6% after the close of trading, since the company’s total revenue in the fourth fiscal quarter, which ends at the end of next month, is expected by the issuer at $14 billion versus $14.1 billion included in the forecast by investors. In fact, they were upset by the fact that Broadcom’s revenue would not grow as rapidly outside of the AI segment. The company’s management emphasized that non-AI activities have already passed local minimums in terms of demand, and revenue is beginning to return to growth. The third quarter had to be completed with net losses of $1.88 billion.
However, in the AI segment, Broadcom’s revenue for the fiscal year will be higher than analysts’ expectations, which were expecting $11.8 billion. Total revenue in the last quarter was slightly higher than market expectations, at $13.07 billion. Of this, semiconductor components accounted for $7.27 billion in revenue (+5%), and $5.8 billion in software. According to Broadcom management, demand for AI infrastructure components will also remain high next year. The head of the company, Hock Tan, believes that over time, AI components adapted to the needs of a specific customer will be in increased demand, and the company specializes in their development. However, this trend will gain momentum over several years and will not manifest itself immediately, he added.
The close relationship with Apple will also help Broadcom boost wireless component revenue by 20% sequentially in the fourth quarter, but will only be flat year-over-year. The head of the company also admitted that in the near future he is not going to resort to his favorite method of business expansion in the form of acquiring other companies. Much remains to be done to complete the VMware integration, a process that could take a couple of years.