This past week, not only Marvell Technology reported, but also its larger competitor Broadcom. Both stocks are being watched closely by investors looking to cash in on the AI boom, and in Broadcom's case, the company's share price was pushed lower by the release of disappointing full-year revenue guidance.
Like Marvell, Broadcom supplies networking components used in server-based artificial intelligence systems. They also help their clients develop customized computational accelerators for artificial intelligence systems. According to Broadcom management, this year, out of $10 billion in revenue in the field of artificial intelligence, approximately $7 billion will be generated by the company's two largest clients, precisely due to Broadcom's participation in the development of computing accelerators. The names of these largest Broadcom clients are not disclosed, but analysts believe that we are talking about Google (Alphabet) and Facebook✴ (Meta✴ Platforms).
Broadcom's profit margin in this area should be closer to the 75% it earns on average. By refusing to raise its full-year revenue forecast from $50 billion, the company disappointed investors, even though that level implies revenue growth of 40% year-on-year. Since the beginning of this year, Broadcom shares have risen in price by 26%, largely due to investors' hopes of benefiting from the artificial intelligence systems segment. On the other hand, after the publication of Broadcom's quarterly report, the company's stock price decreased by only 1%, which cannot be considered a serious drop.
On February 4th, Broadcom completed the first quarter of the new fiscal year, and the company's AI revenue quadrupled year-over-year to $2.3 billion over the period. This helped offset the cyclical decline in revenue in the corporate and telecommunications sectors, according to company management . Revenue from sales of semiconductor components as a whole grew by 4% to $7.39 billion. Software infrastructure solutions increased Broadcom's core revenue by 153% to $4.57 billion, exceeding analysts' expectations. The company's revenue for the quarter as a whole amounted to $11.96 billion, net profit reached $5.25 billion.
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