Broadcom Shares Slip After Earnings Beat, Higher Forecast

Broadcom Inc. shares fell on Friday, June 14, 2024, despite the chip and software company posting better-than-expected fiscal second-quarter results and raising its full-year revenue forecast. The stock was down 1.9% at 1,700.49 in morning Nasdaq trading after rising 14.5% in premarket trading. Broadcom pointed to strong demand tied to artificial intelligence products as a key driver of its outlook.

Broadcom reported fiscal second-quarter earnings of $10.96 per share on revenue of $12.49 billion. Analysts had expected $10.84 per share on $12.03 billion in revenue, according to the figures cited in the report.

The company lifted its fiscal year 2024 revenue guidance to $51 billion from $50 billion. The updated forecast was above a consensus estimate of $50.42 billion cited in the report.

AI demand and guidance revision

Broadcom said the higher guidance was driven largely by demand for AI-related products. AI revenue was $3.1 billion in the second quarter, according to the company’s results.

Market reaction was mixed even with the beat-and-raise quarter. The pullback in regular trading suggested investor caution after the sharp move higher before the opening bell.

VMware contribution to software revenue

Broadcom’s acquisition of VMware continued to shape its software business. VMware contributed $2.7 billion to software revenue in the second quarter, according to the company.

Investors will be watching whether Broadcom’s AI-related revenue growth and the VMware integration continue to support the company’s full-year revenue target in coming quarters.