Broadcom Surges on AI-Fueled Forecast and Dividend Hike
The chipmaker announced strong quarterly results and projected first-quarter AI revenue that could double year-over-year, signaling sustained momentum from artificial intelligence spending.
Broadcom Inc. (AVGO) delivered a robust outlook for the upcoming quarter, forecasting revenue that surpassed Wall Street's expectations, driven by accelerating demand for its artificial intelligence-related technology. The company also rewarded shareholders with a 10% increase in its quarterly dividend, signaling strong confidence in its financial trajectory.
The San Jose-based semiconductor and software giant announced its fourth-quarter and fiscal year financial results, capping a year of significant growth. For the fourth quarter, Broadcom reported revenue of $18.0 billion, a substantial 28% increase from the same period last year. Adjusted earnings per share came in at $1.95, beating analyst estimates of $1.87 and underscoring the company's operational efficiency and profitability.
The primary catalyst for the bullish forecast is the company's booming AI business. Broadcom projected first-quarter revenue of approximately $19.1 billion. A significant portion of this is expected to come from its AI division, which the company anticipates will generate $8.2 billion in the first quarter alone, effectively doubling its AI semiconductor revenue year-over-year. This rapid expansion highlights Broadcom's successful positioning in the high-stakes AI hardware market, providing critical components for data centers and networking.
"We are seeing an accelerating demand for our AI solutions," the company noted in its quarterly earnings statement. The results suggest that massive investments in AI infrastructure continue to flow through the supply chain, benefiting key technology providers like Broadcom.
In a move reflecting its strong cash flow and positive outlook, Broadcom's board announced a 10% increase to its quarterly cash dividend. This return of capital to shareholders is a testament to management's confidence in sustained earnings power, even as it invests heavily to capture the growth in AI.
Broadcom's portfolio, which includes networking chips, custom silicon, and enterprise software, makes it an integral part of the digital economy. The latest results demonstrate its ability to capitalize on the biggest trends in technology, particularly the build-out of generative AI capabilities that require immense computing power.
As one of the world's largest chipmakers, Broadcom's performance is a key barometer for the health of the technology sector. The strong guidance suggests that corporate IT spending, at least in the realm of artificial intelligence, remains resilient, providing a positive data point for the industry as it heads into the new year.