Broadcom accelerates its growth and soars on the stock market in the heat of demand for microprocessors due to the rise of artificial intelligence. The microprocessor giant based in Palo Alto (California) increased its revenues by 43% in the second quarter of its fiscal year, closed on May 5, to $12,487 million, largely thanks to the acquisition of VMare, announced in 2022 and closed last year. The company has also raised its forecasts for the entire year and has announced the split of its shares, following in the footsteps of Nvidia. Investors applauded wildly and the company’s shares rose around 15% outside normal trading hours.
This rise represents a revaluation of more than 100,000 million dollars for the company, which is thus around 800,000 million dollars in capitalization and is among the 10 largest American companies by stock market value.
The growth in income has been accompanied by a containment of spending, so that profit has skyrocketed by 60%, to $2,121 million. The company has raised its consolidated revenue forecasts for the entire fiscal year 2024 to $51 billion and adjusted EBITDA to 61% of revenue. In the second quarter, adjusted EBITDA has grown by 31%, to $7,429 million, 59% of revenue, so the company plans to continue increasing profitability. All of these figures have exceeded analysts’ forecasts.
“Broadcom’s second quarter results were once again driven by demand for AI and VMware. Revenue from our AI products hit a record $3.1 billion during the quarter. “Infrastructure software revenue accelerated as more enterprises adopted VMware’s software stack to build their own private clouds,” said Hock Tan, president and CEO of Broadcom, in a statement.
Broadcom is used to growing through acquisitions, which it combines with the upward evolution of its business. The growth of 43% remains at 12% without counting the purchase of VMware, with which it has boosted its data center business, cloud computing and the software market.
With this operation, Broadcom removed the thorn from the frustrated purchase of Qualcomm, which would have been the largest in history in the sector and which was vetoed in 2018 by the Government of Donald Trump, which considered it a threat to national security. Despite having been founded in the United States, Broadcom was headquartered in Singapore. He has since moved to California.
“Free cash flow, excluding restructuring and integration in the quarter, was $5.3 billion, 18% more than the same period last year,” said Kirsten Spears, the company’s chief financial officer.
Spears has announced a split (split) of each share in 10 “to make ownership of Broadcom shares more accessible to investors and employees.” The proportion is the same as that used by Nvidia to divide its shares. Broadcom shares are worth about $1,500 on the stock market, having risen 75% in the last 12 months until the close of trading this Wednesday. The company was one of the analysts’ candidates to make a split.
Although the operation is neutral from an economic point of view, it is usually well received by the market due to the psychological lowering of the shares it implies. The split will take effect between the market close on July 12 and the opening of the session on July 15.
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