(Reuters) -Broadcom forecast its first-quarter revenue above Wall Street estimates on Thursday, betting on booming demand for its custom artificial intelligence chips and networking gear from cloud providers doubling down on GenAI infrastructure adoption.
Shares of the Palo Alto, California-based company rose over 3% in extended trading, having gained about 60% so far this year as one of the largest beneficiaries of a rally in AI-linked shares.
Big tech has been vying to reduce its dependence of pricey, supply-constrained AI processors made by front-runner Nvidia (NASDAQ:), helping Broadcom (NASDAQ:) which makes advanced custom artificial intelligence chips for so-called hyperscalers.
Demand for Broadcom’s networking chips that help move around vast amounts of data used by applications such as OpenAI’s ChatGPT has also increased, as businesses double down on investments in GenAI infrastructure.
The company forecast revenue of about $14.6 billion for the first quarter, compared with analysts’ average estimate of $14.57 billion according to data compiled by LSEG.
Though the company faces intense competition from Nvidia’s ethernet-like Infiniband products, Broadcom still benefits from the expansion of AI data centers as it is one of the largest providers of advanced networking equipment.
While hailed as a chipmaker, Broadcom has proliferated into a tech conglomerate owing to buyouts such as its $69 billion acquisition of cloud-computing firm VMware (NYSE:). The infrastructure software segment grew 196% to $5.82 billion in the fourth quarter.
The company reported fourth-quarter revenue of $14.05 billion, compared with expectations of $14.09 billion.
On an adjusted basis, Broadcom earned $1.42 per share compared with estimates of $1.38 per share.
