Broadcom Inc. (NASDAQ: $AVGO) is a global company that specializes in the design, development, and supply of diverse semiconductor devices. Their primary focus is on intricate digital and mixed signal complementary metal oxide semiconductor devices, as well as analog III-V based products. The company operates through two key segments: Semiconductor Solutions and Infrastructure Software.
Within the Semiconductor Solutions segment, Broadcom offers a range of products such as set-top box system-on-chips (SoCs), central office/consumer premise equipment SoCs for cable, digital subscriber line, and passive optical networking, wireless local area network access point SoCs, Ethernet switching and routing custom silicon solutions, embedded processors and controllers, serializer/deserializer application-specific integrated circuits, optical and copper physical layer devices, fiber optic components, and RF semiconductor devices.
In addition, Broadcom provides RF front-end modules, filters, Wi-Fi, Bluetooth, and global positioning system/global navigation satellite system SoCs. They also offer custom touch controllers, inductive charging solutions, an attached small computer system interface, a redundant array of independent disk controllers and adapters, peripheral component interconnect express, fiber channel host bus adapters, read channel-based SoCs, custom flash controllers, preamplifiers, optocouplers, industrial fiber optics, motion control encoders and subsystems, light emitting diodes, ethernet PHYs, switch ICs, and camera microcontrollers.
The company’s products find applications in various sectors, including enterprise and data center networking, home connectivity, set-top boxes, broadband access, telecommunication equipment, smartphones and base stations, data center servers and storage systems, factory automation, power generation, alternative energy systems, and electronic displays.
Broadcom CEO Expects AI Windfall Even as Sales Growth Slows
Broadcom Inc., a chip provider for major tech companies including Apple Inc., anticipates that the rapid expansion of artificial intelligence computing will help counterbalance its most significant slowdown since 2020.
The revenue generated from networking semiconductors, crucial for supporting AI systems, currently constitutes 15% of the company’s total chip sales. Broadcom disclosed that this share is projected to exceed 25% in fiscal 2024, as stated in the quarterly results released on Thursday.
The promising outlook for AI growth brought relief to investors, who initially drove down the shares following the report. Broadcom is experiencing its slowest sales growth since the early days of the pandemic, attributed to reduced spending by corporate customers and telecom providers.
According to CEO Hock Tan, AI stands out as a positive factor. He mentioned on a conference call that spending on computer networks necessary for supporting these services is expected to double. Thus far, chipmaker Nvidia Corp. has reaped significant benefits from the AI surge, leading to a valuation surpassing $1 trillion this year.
Tan’s comments aided in the recovery of shares, rebounding from a 3.6% decline in late trading. As of 6 p.m. New York time, the stock remained relatively unchanged at $922.
In the fourth quarter ending Oct. 29, revenue saw a 4% increase to $9.3 billion. With the recent acquisition of VMware Inc. for over $60 billion, Broadcom projects its 2024 revenue to reach around $50 billion, incorporating the acquired entity.
While this figure may seem below the combined sales estimates of the two companies, Broadcom intends to spin off two VMware units, contributing approximately $2 billion in sales. Executives estimate that for the remaining 11 months of fiscal 2024, VMware will contribute about $12 billion to total revenue, with a one-year integration period.
Looking ahead, Broadcom foresees mid- to high-single-digit percentage growth in semiconductors for the coming year, representing a slowdown compared to the preceding two years.
In the fourth quarter, Broadcom reported a profit of $11.06 per share, excluding certain items, surpassing analysts’ predictions of $10.93 per share. The chip business recorded sales of $7.33 billion, aligning with estimates, while infrastructure software revenue reached $1.97 billion, exceeding the projected $1.94 billion.
Broadcom Inc. (AVGO) Reports Solid Q4 and FY 2023 Results; Forecasts Strong FY 2024 Outlook
On December 7, 2023, Broadcom Inc (NASDAQ:AVGO) released its 8-K filing, disclosing financial results for the fourth quarter and fiscal year ending on October 29, 2023. Q4 revenue experienced a 4% increase, reaching $9.295 billion, with free cash flow rising significantly to $4.723 billion, constituting 51% of revenue.
The quarter’s adjusted EBITDA stood at $6.048 billion, equivalent to 65% of revenue, showcasing Broadcom’s robust profitability and cash generation capabilities.
Closing out fiscal year 2023, Broadcom Inc (NASDAQ:AVGO) delivered strong financial performance. Annual net revenue amounted to $35.819 billion, reflecting an 8% growth from the previous year. The semiconductor solutions segment contributed substantially with a 9% increase, while the infrastructure software segment saw a 3% uptick.
Net income for the fiscal year reached $14.082 billion, a notable surge from $11.495 billion in FY 2022, indicating a substantial increase of $2.587 billion.
Financial Details for Q4 Fiscal Year 2023
In the fourth quarter, Broadcom Inc (NASDAQ: AVGO) achieved a non-GAAP diluted EPS of $11.06 and a GAAP diluted EPS of $8.25. The semiconductor solutions segment reported a 3% increase, while the infrastructure software segment grew by 7%. Broadcom’s strong cash position was emphasized by an end-of-quarter cash and cash equivalents balance of $14.189 billion, up from $12.055 billion at the end of the prior quarter.
Outlook for Broadcom’s Fiscal Year 2024
Broadcom Inc (NASDAQ:AVGO) presented an optimistic outlook for fiscal year 2024, setting revenue guidance at approximately $50 billion, inclusive of contributions from the recently acquired VMware. This represents a substantial 40% increase from the previous year. The company also anticipates adjusted EBITDA to be around 60% of the projected revenue. The acquisition of VMware is considered transformative, with Broadcom’s CEO Hock Tan stating,
“The acquisition of VMware is transformative. In fiscal year 2024, we expect the semiconductor segment to sustain its mid to high single-digit revenue growth rate, with the contribution of VMware propelling consolidated revenue to $50 billion and adjusted EBITDA to $30 billion.”
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