Broadcom Inc. raised its annual forecast for revenue from chips aiding artificial intelligence work by 10% on Wednesday and announced a stock split to address the surge in its share price this year. The chipmaker, headquartered in Palo Alto, California, saw its stock jump 12% in extended trading.
The company now expects $11 billion in revenue from AI-related chips in 2024, up from a previous forecast of $10 billion. Broadcom's advanced network chips help process the vast amounts of data used by AI applications such as OpenAI's ChatGPT, making it one of the beneficiaries of the corporate rush to invest in this trend. In the second quarter, Broadcom generated $3.1 billion in revenue from AI products.
The company's stock has already risen more than 30% this year and nearly doubled in 2023, prompting a 10-for-1 forward stock split to make its shares more attractive to retail investors. The adjusted trading is expected to begin on July 15.
Broadcom's custom chip division has also attracted orders from major cloud service providers looking to reduce their reliance on expensive Nvidia processors. It is widely believed that Broadcom is customizing chips for companies like Google and Meta.
Revenue from Broadcom's semiconductor solutions division grew about 6% to $7.2 billion. Analyst Ben Bajarin from Creative Strategies said, "With the data center market shifting towards AI servers, Broadcom has significant growth potential. In many ways, it will be the second biggest beneficiary of this transition, second only to Nvidia."
Affected by its acquisition of VMware, Broadcom's infrastructure software division saw its revenue double. The company increased its full-year revenue forecast by $10 billion to $51 billion. Additionally, the company raised its full-year core profit forecast and exceeded the LSEG estimates for adjusted earnings per share and revenue in the second quarter.