Shares of Broadcom (NASDAQ:AVGO) were climbing today after the diversified chip stock posted better-than-expected results in its fiscal first-quarter earnings report.
As of 10:19 a.m. ET, the stock was up 3.6% on the news.
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Broadcom brings good news on the AI front
Broadcom reported 25% revenue growth, which included a benefit of about three weeks of its acquisition of VMware, to $14.9 billion. That beat analyst estimates at $14.6 billion.
Investors were particularly impressed with the company's artificial intelligence (AI) revenue growth, which was up 77% to $4.1 billion, driven by 47% growth in infrastructure revenue to $6.7 billion. In its other segment, semiconductor solutions, revenue rose 11% to $8.2 billion.
Broadcom continued to generate exceptional profit margins, with adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $10.1 billion, or a 67% margin. On the bottom line, the company reported adjusted earnings per share of $1.60, up from $1.10 in the quarter a year ago, and ahead of the consensus at $1.51.
Touting strength across its business, CEO Hock Tan said, "We expect continued strength in AI semiconductor revenue of $4.4 billion in Q2, as hyperscale partners continue to invest in AI XPUs and connectivity solutions for AI data centers."
What's next for Broadcom?
Broadcom has long been seen as a winner from AI, and that forecast is starting to bear fruit, as these numbers and Tan's comments indicate.
Looking ahead to the second quarter, the company expects revenue of $14.9 billion, up 20% from the quarter a year ago and in line with estimates. It also called for a 66% adjusted EBITDA margin, indicating profits should be similar to the first quarter.
Given the strong growth and momentum in AI, it's not a surprise to see the stock gaining today.
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Jeremy Bowman has positions in Broadcom. The Motley Fool recommends Broadcom. The Motley Fool has a disclosure policy.
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