By Arshia Bajwa
(Reuters) – Broadcom on Wednesday raised its annual forecast for revenue from its artificial intelligence chips by 10% and announced a stock split to capitalize on a rise in its stock this year.
Shares of the Palo Alto, California-based chipmaker rose 12% in extended trading.
The company expects $11 billion in revenue from AI-enabled chips by 2024, up from its previous forecast of $10 billion.
Broadcom makes advanced networking chips that help move vast amounts of data used by AI applications like OpenAI’s ChatGPT, which is one of the beneficiaries of businesses investing heavily in the boom.
Broadcom generated $3.1 billion in revenue from AI products in the second quarter.
The company, which has unloaded shares more than 30% so far this year, will undertake a 10-for-1 forward stock split in 2023 in an effort to make its shares more affordable for retail investors after nearly doubling.
Split-adjusted trading is expected to begin on July 15.
Its custom chips unit has attracted orders from major cloud providers, reducing their reliance on Nvidia’s expensive processors. Broadcom is widely believed to be making custom chips for Google and Meta.
Revenue at Broadcom’s Semiconductor Solutions division, which includes its networking and custom chips, rose 6% to $7.20 billion in the quarter.
“As the data center market moves to AI servers, Broadcom’s progress has been tremendous. In many ways (Broadcom) will be the second biggest beneficiary of this shift, behind Nvidia,” said Ben Bajarin, analyst at Creative Strategies.
Revenue from the company’s infrastructure software division more than doubled, thanks in part to its acquisition of VMware.
Broadcom raised its full-year revenue forecast by $1 billion to $51 billion. It raised its annual core profit forecasts and beat LSEG estimates for second-quarter adjusted earnings per share and revenue.
(Reporting by Arshia Bajwa in Bengaluru; Editing by Shilpi Majumdar)
