Broadcom Set to Report Q3 2024 Earnings: AI Takes Center Stage
Introduction
Broadcom (AVGO) is scheduled to release its earnings report for the third quarter of 2024 after the closing bell on Thursday. With artificial intelligence (AI) expected to be a key theme, investors are eagerly awaiting updates on the company’s AI-related sales and outlook. Additionally, there is speculation about OpenAI, the maker of ChatGPT, becoming a new custom AI chip customer for Broadcom.
Analyst Estimates
According to estimates compiled by Visible Alpha, analysts expect Broadcom’s revenue for the third quarter of 2024 to come in at $13.04 billion, a significant increase from $8.88 billion in the year-ago period. However, net income is projected to decline to $2.94 billion, compared to $3.3 billion in the previous year. Diluted earnings per share (EPS) are also expected to decrease. It’s worth noting that the company recently underwent a 10-for-1 stock split.
| Analyst Estimates for Q3 2024 | Q2 2024 | Q3 2023 | |
| Revenue | $13.04 billion | $12.49 billion | $8.88 billion |
| Diluted Earnings Per Share | 63 cents | 44 cents | 77 cents |
| Net Income | $2.94 billion | $2.12 billion | $3.3 billion |
Key Metrics: AI-Related Sales
Broadcom has been capitalizing on the AI boom by offering custom AI chips to tech giants. Analysts anticipate the company’s AI sales to reach $3.25 billion in the third quarter, representing sequential growth and more than triple the sales from the previous year. UBS analysts have identified Broadcom’s AI-related segments and the integration of VMware, a software firm acquired by Broadcom last year, as the primary drivers of sequential growth.
There is a possibility that Broadcom will revise its full-year revenue outlook for AI-related sales. In the previous quarter, the company increased its outlook to $11 billion from $10 billion, but analysts believe this figure may be conservative given the estimates for the third quarter.
Business Spotlight: OpenAI Could Be New AI Chip Customer
Citi analysts speculate that Broadcom has secured OpenAI, backed by Microsoft (MSFT), as a new customer for custom AI chips. This potential deal could be announced in Broadcom’s earnings report. Broadcom has established itself in the AI space by designing custom chips for Big Tech companies, including Google (GOOGL), Meta Platforms (META), and ByteDance, the owner of TikTok.
Market Performance
Broadcom shares closed nearly 4% higher today and have gained over 40% this year as of Friday’s close.
Conclusion
As Broadcom prepares to report its earnings for the third quarter of 2024, all eyes are on the company’s AI-related sales and outlook. With the AI boom driving demand for custom chips, Broadcom’s position in the market is expected to strengthen. The potential partnership with OpenAI could further solidify Broadcom’s presence in the AI space. Investors eagerly await the earnings report to gain insights into the company’s performance and future prospects.
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