Broadcom The stock rose about 12% on Thursday after the company reported second-quarter results that beat analyst expectations and showed it was benefiting from the artificial intelligence boom.
Broadcom reported earnings per share of $10.96, beating the LSEG consensus estimate of $10.84 per share. Revenue of $12.49 billion beat the $12.03 billion estimate.
The company now expects fiscal 2024 sales to be about $51 billion, up from the company’s previous outlook and slightly above the consensus estimate of $50.42 billion.
Analysts see Broadcom as a beneficiary of increased investment in AI.
“Alongside NVIDIA“We see Broadcom as an important part of the ongoing AI infrastructure buildout and reiterate our buy rating on the stock with 8% upside (AVGO is trading at $1,713 after hours) and an updated 12-month price target of $1,850 (previously $1,550),” Goldman Sachs analysts said in a note to investors on Thursday.
Bank of America analysts reiterated their buy rating and said they see Broadcom as a top contender in the AI space because it’s positioned to grow with custom AI chips, Ethernet networking and can upsell VMware to enterprise customers who are adopting AI.
“We forecast revenue of $51.5 billion in FY24, above guidance driven by the continued upside in AI. Revenue growth in FY25 and FY26 rises to 16% and 10% year-over-year from 14% and 8% prior,” Bank of America analysts said.
Broadcom also announced a 10-for-1 stock split on Wednesday. Shares are expected to start trading on a split-adjusted basis starting July 15.
CNBC’s Michael Bloom contributed to this report.