$Broadcom(AVGO.US) (long position) +7% pre-mkt after posting much stronger than expected 2nd quarter revenue guidance, driven by its AI chip growth. In last night’s earnings call, $Broadcom(AVGO.US) management said that it has "line of sight" to sales from AI topping $100 billion in 2027, up from an annualized run rate of about $40 billion this year based on current quarter guidance. Broadcom's entire annualized revenue base now sits at around $70 billion.
Broadcom's stock rose last night following its fiscal first-quarter earnings report and conference call, but $Broadcom(AVGO.US) stock had lost more than 20% since the company's previous results, which also exceeded Wall Street's estimates. $NVIDIA(NVDA.US) ‘s stock slumped more than 6% after its strong quarterly rarnings last week. Meanwhile, the shares of $Microsoft(MSFT.US), $Amazon(AMZN.US), $Alphabet - C(GOOG.US), which are each spending hundreds of billions of dollars on AI build-outs, are in the red so far this year. AVGO said last night that AI chip revenue more than doubled on a year-over-year basis to $8.4 billion in its fiscal first quarter. The company expects that revenue to hit $10.7 billion in the second quarter, 15% ahead of Wall Street expectations. The AI chip business tends to be naturally concentrated to a few very big companies that have the means to build out giant data centers. But some investors have been worried that Broadcom's business was too concentrated with $Alphabet - C(GOOG.US), which uses Broadcom to help design and build the TPU chips that have become essential to the internet giant's AI resurgence. Broadcom said that isn't the case. The company now has six customers for what it calls XPUs. XPUs are custom large AI training/inference chips optimized for AI/HPC (high performance computing) workloads. These are AI processors custom-designed for specific workloads that can run more efficiently than the GPU chips that $NVIDIA(NVDA.US) sells.
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