(Reuters) – Broadcom on Thursday forecast its first-quarter earnings to beat Wall Street estimates, betting on demand for artificial intelligence chips and networking gear to double the adoption of GenAI infrastructure.
Shares of the Palo Alto, Calif.-based company rose more than 3% in extended trading, having gained about 60% this year as one of the biggest gainers in AI-related stocks.
Big tech is struggling to reduce reliance on expensive, supply-constrained AI processors made by forerunner Nvidia (NASDAQ: ), helping Broadcom (NASDAQ: ), which makes advanced artificial intelligence chips for so-called hyperscalers.
Demand for Broadcom’s network chips, which help move large 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 an average analyst estimate of $14.57 billion, according to data compiled by LSEG.
Although the company faces intense competition from Nvidia’s Ethernet-like Infiniband products, Broadcom is still benefiting from the expansion of AI data centers as it is one of the largest providers of advanced networking equipment.
Although hailed as a chipmaker, Broadcom has blossomed into a tech conglomerate through acquisitions 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 $14.09 billion a year earlier.
On an adjusted basis, Broadcom earned $1.42 per share, compared to estimates of $1.38 per share.