Chipmaker Broadcom raises annual revenue forecast, unveils stock split

(Reuters) -Chipmaker Broadcom raised its annual revenue forecast on Wednesday and announced a stock split, following a massive rally in the stock, with Wall Street betting heavily on the hardware that supports the generative AI technology.

Shares of the Palo Alto, California-based company surged 12% in extended trading. The stock has rallied more than 30% so far this year, after almost doubling in 2023.

The company will carry out a 10-for-1 forward stock split, in a bid to make its shares more affordable for retail investors. The split-adjusted trading is expected to begin on July 15.

Broadcom manufactures advanced networking chips that help move around vast amount of data used by AI applications such as OpenAI’s ChatGPT, making it one of the beneficiaries of businesses heavily investing in the booming technology.

Broadcom recorded revenue of $3.1 billion from AI products during the second quarter.

Its custom chips unit has also attracted orders from large cloud providers looking to reduce their dependence on Nvidia’s pricey processors.

Revenue from the semiconductor solutions segment, which houses the company’s networking and custom chips, rose about 6% to $7.20 billion in the quarter, compared with the Visible Alpha estimate of $7.12 billion.

Broadcom had said in March it added a third customer for its custom AI chip business. The other so-called “hyperscalers” it makes custom chips for are widely considered by analysts to be Google and Meta.

Revenue from the company’s infrastructure software segment more than doubled, as it expanded its software portfolio through acquisitions of leading software providers such as VMware.

Broadcom now expects full-year 2024 revenue at about $51 billion, including contribution from VMware, versus its prior forecast of about $50 billion. Analysts on average estimate $50.42 billion, according to LSEG data.

It also raised its annual core profit projections and beat analysts’ estimates for second-quarter earnings and revenue.

(Reporting by Arsheeya Bajwa in Bengaluru; Editing by Shilpi Majumdar)