Broadcom earnings on deck as network chipmaker eyes further AI gains
Broadcom, which currently generates around 15% of its revenues from AI chips, is looking to expand its reach in that market alongside its $69 billion move into enterprise via its VMWare takeover.
Broadcom (AVGO) - Get Free Report shares edged higher in pre-market trading ahead of the network equipment chipmaker's third quarter earnings scheduled for after the closing bell.
Analysts expect the group, which is accelerating the production of AI-focused chips, to post an adjusted bottom line of $10.42 per share, up 7.1% from last year. Group revenues are forecast to nudge only modestly higher, however, to $8.86 billion, with investors likely focused on plans to ramp chip sales over the coming quarters.
The group will also likely provide further details on the state of play of its $69 billion takeover of enterprise software group VMware, which was given preliminary support from competition authorities in the U.K. late last month. The deal is also being probed by the U.S. Federal Trade Commission.
"Broadcom continues to benefit from several growth catalysts, particularly in the wireless sector driven by the rollout of 5G technology and the networking domain leveraging its generative AI capabilities," said Crispidea analyst Pratik Mundra, who carries a 'buy' rating with a $938 price target on Broadcom stock.
"While the company is enjoying robust demand for its networking solutions, driven by significant growth in AI infrastructure and compute offload, challenges arise from wireless sector setbacks and weaker Chinese market performance," he added.
Broadcom shares were marked 0.62% higher in pre-market trading to indicate an opening bell price of $897.79 each, a move that would extend the stock's year-to-date gain past 60%.
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