Broadcom Inc., a leading chip company, has reported better-than-expected profits for the fourth quarter. However, the company’s shares experienced a decline in Thursday’s aftermarket action.
Financial Performance
In the fiscal fourth quarter, Broadcom achieved a net income of $3.5 billion or $8.25 per share. This represents an increase from $3.3 billion or $7.83 per share in the same period last year. On an adjusted basis, the company earned $11.06 per share, up from $10.45 per share in the previous year. Analysts had predicted earnings of $10.96 per share.
Furthermore, Broadcom’s revenue rose to $9.30 billion from $8.93 billion, surpassing the FactSet consensus of $9.28 billion. The company’s revenue from semiconductor solutions reached $7.33 billion, showing a 3% increase, while revenue from infrastructure solutions amounted to $1.97 billion, reflecting a 7% growth.
Factors Driving Growth
Chief Executive Hock Tan attributed the positive results to investments in accelerators and network connectivity for artificial intelligence made by hyperscalers.
Future Outlook
Looking ahead, Broadcom expects to generate $50 billion in revenue for the new fiscal year, including contributions from the recently acquired VMware. However, this may not be fully reflected in consensus estimates. The company anticipates that adjusted earnings before interest, taxes, depreciation, and amortization will account for approximately 60% of projected revenue, compared to the previous year’s figure of 65%.
In terms of revenue growth, Broadcom foresees its semiconductor segment to sustain a mid- to high-single-digit growth rate in fiscal 2024.
Conclusion
Despite exceeding profit expectations, Broadcom’s stock experienced a 2% decline during Thursday’s extended trading session. The company’s positive financial performance, driven by investments in AI by hyperscalers, indicates a promising future.
