Broadcom Revenue Surges 34% in First-Quarter Thanks to VMware

Broadcom, a provider of semiconductor and infrastructure software solutions, said its revenue surged by 34 percent year-over-year, reaching a total of $12.0 billion for the first quarter of fiscal year 2024.
Broadcom chipset
This substantial growth was largely attributed to the significant contribution from VMware. Excluding VMware, Broadcom’s revenue still saw a notable increase of 11 percent.

Broadcom reported an adjusted first-quarter net income of $5.25 billion, reflecting its performance in the market.

Looking ahead, Broadcom has set fiscal year 2024 guidance, anticipating consolidated revenue of $50 billion and adjusted EBITDA of $30 billion.

Broadcom CEO Hock Tan highlighted during a post-earnings call that approximately one-fifth of the annual revenue is expected to be derived from artificial intelligence (AI) business.

Broadcom said it expects $10 billion in revenue from chips related to AI this year, Reuters news report said.

Hock Tan said that about $7 billion of Broadcom’s AI chip revenue in 2024 would come from helping just two major clients design custom AI chips. Hock Tan did not name the customers, but analysts widely believe that they are Alphabet’s Google and Facebook owner Meta Platforms.

For the fiscal first quarter ended Feb. 4, Broadcom’s AI revenue quadrupled from a year earlier to $2.3 billion during the quarter, more than offsetting the current cyclical slowdown in enterprise and telcos, Hock Tan said.

Hock Tan emphasized the growing demand for Broadcom’s networking products in AI data centers, as well as the custom AI accelerators from hyperscalers, which are driving growth in the semiconductor segment.

Hock Tan in its earnings report noted that complex data centers involved in generative AI development heavily rely on networking gear from providers like Broadcom, positioning the company as a key player in supporting these infrastructure needs.

Furthermore, Broadcom’s revenue from AI quadrupled from the previous year, amounting to $2.3 billion during the quarter. This significant growth in AI revenue has helped offset the current cyclical slowdown experienced in enterprise and telecommunications sectors.

In addition to its semiconductor solutions segment, which saw a 4 percent increase in revenue to $7.39 billion, Broadcom’s infrastructure software revenue experienced remarkable growth, surging by 153 percent to $4.57 billion.

Broadcom’s portfolio has expanded to include various technology firms such as VMware and software company CA Technologies. The company is also recognized for its custom chips, particularly in the ASICs (application-specific integrated circuit) market. ASICs, unlike general-purpose chips, can be customized according to specific customer preferences, Reuters news report said.

One of Broadcom’s achievements is its collaboration with tech giant Alphabet, being the chipmaker behind Google’s tensor processing units (TPUs), which power some of its cloud services. This partnership underscores Broadcom’s significance in supporting the infrastructure needs of leading technology companies.

Moreover, Alphabet’s increased capital expenditure in expanding its AI offerings and Meta Platforms’ substantial payment to Broadcom last year further highlight the company’s integral role in the tech industry’s growth.

Baburajan Kizhakedath