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Broadcom Rallies After AI Fuels Stronger-Than-Expected Forecast
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March 6, 2025
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8:44Now Playing'This is what the chip sector needed!' Bloomberg Managing Editor of Technology Lynn Doan reacts to earnings from chip supplier Broadcom that sent the company's stock soaring after the market close. The stronger-than-expected forecast was fueled by Broadcom's positive outlook on AI.
Broadcom Inc., a chip supplier for Apple Inc. and other big tech companies, jumped in late trading after an upbeat forecast assured investors that spending on artificial intelligence computing remains healthy.
Sales will be about $14.9 billion in the three-month period ending May 4, Broadcom said in a statement Thursday. Analysts had estimated $14.6 billion on average, though some projections surpassed $15.1 billion.
The report suggests that a historic boom in AI spending is still going strong. Broadcom has been a major beneficiary of those expenditures, with its data center customers pouring money into new infrastructure. The run-up helped push up the company’s market value above $1 trillion at one point. But investors have grown more cautious in 2025, and they’ve been looking for evidence that the AI surge has legs.
Broadcom’s stock rose more than 10% in extended trading. The shares had earlier closed at $179.45 in regular New York trading, leaving them down 23% in 2025.
Chief Executive Officer Hock Tan said cited AI spending as a key driver during the first quarter, which ended Feb. 2. Sales from that area will total $4.4 billion in the current period, he said in the statement.
The results follow a poorly received earnings report Wednesday from Broadcom competitor Marvell Technology Inc. That company’s revenue increased 27% in the most recent quarter, and it projected an acceleration in the current period. But the growth wasn’t enough for investors, who sent the shares down 20% on Thursday.
Profit was $1.60 a share in the fiscal first quarter, excluding some items, with revenue rising 25% to $14.92 billion. Analysts had estimated $1.50 a share in earnings and sales of $14.6 billion, according to data compiled by Bloomberg.
Though Broadcom makes a variety of chips — including connectivity components for the iPhone and networking technology — investors have focused lately on its custom design business. That division helps data center clients create chips that can create and run artificial intelligence software and services. The company is also now a major provider of software used by corporations to run their businesses and networks.
Tan has built one of the most valuable companies in the chip industry through a string of acquisitions. He also has assembled a software unit that’s now approaching the scale of Broadcom’s semiconductor operations. That reach makes the company’s forecasts a bellwether for demand over a broad swath of the technology industry.
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