American chip giant Broadcom predicts that the rapid expansion of artificial intelligence (AI) computing will help resist industry headwinds as the company experiences its most severe sales slowdown since 2020.
According to the quarterly results released by Broadcom on Thursday (December 7th), its adjusted earnings per share for the fourth quarter were $11.06, higher than analyst expectations of $10.93; The overall revenue was $9.3 billion, a year-on-year increase of 4.1%, exceeding analyst expectations.
Looking at the entire fiscal year of 2023, Broadcom's revenue was 35.82 billion US dollars, a year-on-year increase of 8%, and the growth rate was the lowest since 2020; Net profit was 14.082 billion US dollars, a year-on-year increase of 22.6%. Broadcom also expects an overall revenue of approximately $50 billion for the fiscal year 2024.
The sales growth rate of Broadcom in the fiscal year 2023 is the slowest since the beginning of the epidemic, as both corporate customers and telecommunications providers are controlling expenses.
However, the prospect of artificial intelligence growth has inspired investors. After the report was released, the company's stock price initially fell 3.6% in post market trading and then rebounded.
Artificial intelligence will bring benefits
Chen Fuyang, CEO of Broadcom, stated in a conference call that artificial intelligence is a highlight, and the computer network expenses required to support these services are expected to double.
Chen Fuyang also pointed out that the company will benefit greatly from the wave of artificial intelligence. Taking a peer example, so far GPU chip manufacturer Nvidia, driven by artificial intelligence, has surpassed the $1 trillion mark in valuation this year.
The company also stated that semiconductor revenue used to support artificial intelligence systems currently accounts for 15% of its total chip sales, and the company expects this proportion to increase to over 25% by fiscal year 2024.
In addition, Chen Fuyang is also betting on the software business to maintain growth.
Broadcom has just acquired cloud service provider VMware for over $60 billion, gaining a greater foothold in the field of hybrid cloud services. Hybrid cloud services are aimed at companies that store data both in their own facilities and in external server clusters.
Given the increased investment in data centers and artificial intelligence technology, Broadcom expects its semiconductor business to achieve medium to high single digit percentage growth in the next year.