Broadcom (AVGO) is poised to announce its earnings for the third quarter of 2024 after the closing bell on Thursday, with a significant focus expected on artificial intelligence (AI). Analysts are anticipating an increase in revenue compared to the previous year, but a decline in net income. The company’s performance in the AI sector, particularly in terms of sales growth and future outlook, is likely to be closely monitored by investors.
### Analyst Expectations and Financial Projections
Analysts are projecting Broadcom’s revenue for the third quarter of 2024 to reach $13.04 billion, up from $8.88 billion in the same period last year. However, net income is expected to decrease to $2.94 billion, compared to $3.3 billion in the previous year. Diluted earnings per share (EPS) are also projected to fall. The company implemented a 10-for-1 stock split earlier this year.
In terms of AI-related sales, analysts are forecasting significant growth for Broadcom, with estimates indicating that AI sales could reach $3.25 billion for the quarter. This represents a substantial increase from the previous year and is indicative of the company’s strong position in the AI market.
### Key Metrics: AI-Related Sales
Broadcom has been capitalizing on the growing demand for AI technologies, offering custom AI chips to tech giants in the industry. The company’s AI sales are expected to experience sequential growth, with analysts highlighting this segment as a key driver of revenue increase.
The integration of VMware, a software firm acquired by Broadcom last year, is also expected to contribute to the company’s growth trajectory. UBS analysts have identified AI-related segments and the VMware integration as primary factors driving sequential growth for Broadcom.
### Business Spotlight: OpenAI Partnership
In a potentially significant development, Citi analysts have suggested that Broadcom may have secured OpenAI, a company backed by Microsoft, as a new customer for its custom AI chips. This partnership, if confirmed, could further solidify Broadcom’s position in the AI market and expand its roster of high-profile clients.
Broadcom’s expertise in designing custom chips for leading tech companies, such as Google, Meta Platforms, and ByteDance, has been a key driver of its success in the AI space. By providing tailored solutions for AI workloads, Broadcom has established itself as a trusted partner for industry leaders seeking to enhance their AI capabilities.
### Market Performance and Outlook
Shares of Broadcom have seen a positive trend, with a nearly 4% increase in trading leading up to the earnings announcement. Overall, the company’s stock has surged more than 40% year-to-date, reflecting investor confidence in Broadcom’s business strategy and growth potential.
Looking ahead, investors will be closely monitoring Broadcom’s earnings report for insights into the company’s performance, particularly in the AI sector. Updates on AI-related sales, full-year revenue outlook, and potential new partnerships, such as the speculated OpenAI collaboration, are expected to shape market sentiment towards Broadcom.
In conclusion, Broadcom’s upcoming earnings announcement is anticipated to shed light on the company’s financial health, growth prospects, and strategic initiatives, with a specific focus on its AI business. As the demand for AI technologies continues to rise, Broadcom’s position in the market and its ability to capitalize on this trend will be key factors driving its future success.
