The Numbers
Broadcom (AVGO) delivered a strong beat on both top and bottom lines for its fiscal second quarter, driven by robust AI demand and contributions from its VMware acquisition. Key figures include:
- Adjusted EPS: $10.96, surpassing the consensus estimate of $10.84.
- Revenue: $12.49 billion, significantly ahead of the $12.03 billion expected by analysts.
- AI Revenue: A standout metric, hitting a record $3.1 billion for the quarter, demonstrating powerful momentum in their AI-related silicon and networking solutions.
- VMware Contribution: Revenue from the newly integrated VMware business added $2.7 billion, showing early signs of successful cross-selling and synergy realization.
The Guidance
Management issued a bullish outlook for the remainder of the fiscal year, raising key forecasts above Wall Street expectations. The company now expects:
- Full-Year Revenue: Guidance was raised to approximately $51 billion, up from a prior forecast of $50 billion and above the consensus of $50.42 billion.
- Full-Year Adjusted EBITDA: Forecasted to be approximately 61% of revenue, indicating strong margin control and profitability from the new business mix.
- Upgraded AI Outlook: The AI revenue forecast for fiscal 2024 was lifted from “over $10 billion” to “over $11 billion,” signaling sustained, high-growth demand from hyperscale customers.
Market Reaction
The stock is surging in after-hours trading, reacting positively to the comprehensive beat-and-raise quarter. The market is rewarding the clear evidence that the AI growth story is accelerating and that the VMware integration is proceeding ahead of schedule. The pre-market price of $350.93 is being left far behind as investors digest the strong forward guidance. This report is a highlight of the current earnings season; you can See Live Earnings Releases from other tech giants to compare trends.
Key Takeaway
The investment thesis for AVGO is not just intact; it has been significantly strengthened. The narrative is no longer just about a diversified semiconductor and software company but about a primary beneficiary of the AI infrastructure buildout. The successful integration of VMware is transforming the business into a software-first entity with higher recurring revenue and margins. Concerns about legacy cyclicality are being completely overshadowed by the secular AI and hybrid cloud growth drivers. The company is executing at an elite level, solidifying its position as a core holding for AI exposure.
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