Broadcom has increased its annual revenue forecast for chips used in AI applications. The company announced a 10% increase in its revenue projection for AI-linked chips, raising it to $11 billion in 2024 from the previous forecast of $11 billion.
The company, whose stock has surged over 30% this year following nearly doubling in 2023, plans to implement a 10-for-1 forward stock split to increase affordability for individual investors.
AI Chips Revenue Projection for 2024
The new revenue projection of $11 billion for AI chips signifies Broadcom's confidence in the growing demand for advanced networking chips that facilitate data processing in AI applications.
These chips play a crucial role in powering AI technologies such as OpenAI's ChatGPT, enabling the handling of vast amounts of data. With this upward adjustment, Broadcom aims to solidify its market positioning and capitalize on the ongoing investment boom in AI.
Strong Growth and Stock Split
Major cloud providers are placing orders for Broadcom's custom chips unit to lessen their dependency on Nvidia's costly processors. This strategic move has helped Broadcom diversify its customer base and establish partnerships with industry giants such as Google and Meta.
By manufacturing custom chips tailored to meet the specific requirements of these cloud providers, Broadcom is positioning itself as a go-to solution provider in the rapidly expanding AI market.
In the second quarter, Broadcom recorded $3.1 billion in revenue from AI products. Its semiconductor solutions segment, which encompasses networking and custom chips, witnessed a revenue increase of approximately 6% to reach $7.20 billion.
This growth has been fueled by the shifting dynamics of the data center market towards AI servers. Analyst Ben Bajarin from Creative Strategies predicts that Broadcom stands to be the second-largest beneficiary of this market shift, following Nvidia.
As a measure to make its shares more accessible to retail investors, Broadcom has announced a 10-for-1 forward stock split, which is expected to commence on July 15. The company aims to leverage this stock split to broaden its investor pool. and attract a broader investor base.
Broadcom's positive performance has resulted in a $1 billion increase in its full-year revenue forecast, bringing it to $51 billion. The company has also raised its annual core profit projections and surpassed the estimates of financial analysts for second-quarter adjusted earnings per share and revenue.