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Broadcom (NASDAQ:AVGO) is set to report its third-quarter earnings for 2024, with investors focusing on the company’s AI-related sales and its potential announcement of securing OpenAI, the creator of ChatGPT, as a new AI chip customer. The report comes amid booming demand for AI chips, which has propelled Broadcom's growth.
Analysts expect Broadcom’s revenue to reach $13.04 billion, a significant increase from $8.88 billion in the same period last year. Despite the rise in revenue, net income is projected to fall to $2.91 billion, down from $3.3 billion a year earlier. Diluted earnings per share (EPS) are expected to decline to 62 cents from 77 cents in Q3 2023.
The company's AI business has been a standout, with estimated sales expected to triple from last year to $3.24 billion. Analysts also predict continued growth in AI-related sales through the rest of the year. Broadcom has already boosted its AI revenue outlook for the year, raising expectations from $10 billion to $11 billion. However, some analysts believe this may be conservative.
Additionally, Broadcom’s acquisition of VMware, a software firm, is contributing to sequential growth in earnings. UBS analysts have pointed out that both AI and VMware are key drivers for the company's improved performance.
If Broadcom does announce a partnership with OpenAI, it could solidify its position as a leading supplier of custom AI chips, joining major customers like Google, Meta, and ByteDance.
The company's stock has surged by 40% year-to-date, reflecting investor confidence in its AI and tech segments. As of Wednesday, shares were trading close to $155.74, up nearly 2% during the day.
| Financial Metric | Q3 2024 (Est.) | Q2 2024 | Q3 2023 |
|---|---|---|---|
| Revenue | $13.04B | $12.49B | $8.88B |
| Net Income | $2.91B | $2.12B | $3.3B |
| Diluted EPS | 62 cents | 44 cents | 77 cents |
| AI-Related Sales | $3.24B | N/A | N/A |
