:max_bytes(150000):strip_icc()/GettyImages-1634408872-4b953e53db254f309cd5a112a691bcbc.jpg "What You Need To Know Ahead of Broadcom’s Earnings Report")
:max_bytes(150000):strip_icc():format(jpeg)/GettyImages-1634408872-4b953e53db254f309cd5a112a691bcbc.jpg)
Key Takeaways
- Broadcom is set to release its second-quarter 2024 earnings report after the bell on Wednesday, June 12.
- The company is expected to report that revenue gained sequentially and from the year-ago period.
- Investors are likely to be watching for revenue growth related to artificial intelligence (AI) as Broadcom’s networking and semiconductor businesses offer products used in AI data centers.
- Broadcom may also provide updates on its custom AI chip projects with hyperscaler customers.
Broadcom (AVGO) is set to report second-quarter earnings for fiscal 2024 after the bell on Wednesday, June 12, with investors likely watching for revenue growth driven by artificial intelligence (AI), as well as any updates on Broadcom’s custom AI chip products for big tech customers.
Analysts project Broadcom’s revenue to be $12.04 billion for the second quarter of 2024, up from the previous quarter and the $8.73 billion in the same period in 2023, according to estimates compiled by Visible Alpha.
Net income is expected to be $2.22 billion, up from the first quarter, but down from $3.48 billion in the second quarter of fiscal 2023. Analysts anticipate diluted earnings per share (EPS) of $4.88, compared with $8.15 in the same period a year earlier.
| Analyst Estimates for Q2 FY 2024 | Q1 FY 2024 | Q2 FY 2023 | |
| Revenue | $12.04 billion | $11.96 billion | $8.73 billion |
| Diluted Earnings Per Share | $4.88 | $2.84 | $8.15 |
| Net Income | $2.22 billion | $1.33 billion | $3.48 billion |
After adjustment stripping out certain one-time expenses, non-GAAP net income is projected to be $5.33 billion, compared to $5.25 billion in the first quarter of 2024, and $4.49 billion in the second quarter of 2023. The company reported increased restructuring costs after acquiring software firm VMware and indicated it plans to pay down debt in fiscal 2024.
Key Metric: AI-Driven Revenue Growth
Broadcom has benefited from the AI era as its networking infrastructure and semiconductor segment offerings can be used in AI data centers.
Broadcom CEO Hock Tan said in March that “strong demand for our networking products in AI data centers, as well as custom AI accelerators from hyperscalers, are driving growth in our semiconductor segment.” The company said it expects to generate $10 billion in AI chip sales in 2024.
Analysts expect the semiconductor revenue to come in at $7.12 billion, down from the quarter prior, but up from the $6.81 billion recorded in the year-ago period, while networking revenue is expected to be $4.93 billion, gaining sequentially and from the second quarter of 2023 when it was $1.93 billion.
Business Spotlight: Positioned To Gain as Hyperscalers Make Custom Chips
The company has found an AI niche with big tech companies creating their own custom chips to run AI workloads.
“Broadcom is the leader in designing custom AI chips for hyperscalers including Consumer Internet giants (Google, Meta and ByteDance),” Melius Research analysts wrote, adding they are “most bullish on the $10B+ AI revenue stream” given that “hyperscalers will increase investments in custom chips.”
Meta (META) and Alphabet’s (GOOGL) Google, as well as other hyperscalers Microsoft (MSFT) and Amazon (AMZN), are making custom, in-house, AI-capable chips. Big tech companies also recently reported increasing spending to invest in AI, which could benefit Broadcom.
Melius Research analysts said they “believe that the AI revenue could approach $50B within an investable timeframe, especially if AVGO can add one more customer for custom accelerators,” which would take it from three customers in the consumer AI space to four. The company announced in March that it reached an agreement with a third customer focused on consumer AI.
In its earnings call, the company could provide investors with updates on progress made in existing custom AI chip projects or deals with new customers.
Broadcom shares have gained nearly 27% since the start of the year, at $1,413.09 as of close Wednesday, June 5.