Broadcom revenue beats estimates as AI powers demand, investors still unimpressed
By Max A. Cherney and Arsheeya Bajwa
(Reuters) -Tech conglomerate Broadcom (NASDAQ:AVGO) beat market estimates for first-quarter revenue on Thursday, as cloud providers continue to upgrade data centers to support AI, helping drive demand for its advanced networking chips.
However, smaller rival Marvell (NASDAQ:MRVL) Technology forecast revenue below market expectations, sending its stock down 6% in extended trading.
Broadcom did not update its annual revenue forecast of $50 billion, which falls just shy of expectations, likely disappointing investors. The company expects nearly a fifth of annual revenue to come from AI, CEO Hock Tan said on a post-earnings call.
A 26% rally in Broadcom's stock in 2024, fueled largely by AI optimism, has come with high growth expectations for the Palo Alto, California-based company. The stock dipped more than 1% in after-hours trading.
Marvell and Broadcom sell technology providing fast communication between high-end computers, and the two have been viewed on Wall Street as big potential winners from the explosive growth in AI computing.
Ahead of their results, Broadcom and Marvell each rallied over 4%, both hitting record highs having surged in recent months.
Broadcom has been hailed as a beneficiary of a generative AI push across the tech landscape which has prompted firms to increase spending on infrastructure, pushing demand for their chips which allow different parts of large cloud companies' systems to communicate with one another.
Complex data centers, which are involved in the development of generative AI, are obsolete without networking gear from providers such as Broadcom to support them. This has successfully embedded Broadcom in supply chains, making it one of the larger
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