(Reuters) – In premarket trading on Friday, Broadcom’s shares surged by 12% following the chipmaker’s optimistic revenue projection, which has helped boost confidence in the demand for AI chips after a recent sector-wide decline triggered by Marvell Technology’s gloomy outlook. Analysts from Morgan Stanley expressed relief over the positive results amid prevailing concerns about AI market conditions.
Broadcom’s CEO, Hock Tan, announced that the company anticipates revenue of $4.4 billion in the second quarter from its artificial intelligence semiconductors, as major customers are investing in customized AI chips for data centers. Meanwhile, Marvell Technology saw its shares plummet by 19.8% on Thursday, marking its worst performance in over twenty years, following an in-line revenue forecast.
The broader tech industry’s shift away from Nvidia’s costly and supply-constrained AI processors has continued to benefit Broadcom. Analysts from Bernstein suggested that, despite AI-related uncertainty, Broadcom’s management outlook is increasingly positive, indicating that the AI trade may not be as bleak as previously thought.
Earlier reports by Reuters indicated that Broadcom and OpenAI were collaborating on the design of a custom chip to reduce the organization’s dependence on Nvidia. While Broadcom’s shares more than doubled in 2024, they have declined by approximately 23% this year.
On Friday, peers including Nvidia, Micron Technology, Advanced Micro Devices, and Marvell experienced modest gains ranging from 0.4% to 1.7% in premarket trading. According to data compiled by LSEG, Broadcom’s 12-month forward price-to-earnings ratio stands at 26.58, compared to 23.46 for Nvidia and 24.50 for Marvell.
(Reporting by Kanchana Chakravarty and Siddarth S in Bengaluru; Editing by Shounak Dasgupta)
