What You Need To Know Ahead of Broadcom’s Earnings Report

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Key Takeaways

  • Broadcom reports quarterly results for the third quarter of 2024 after the closing bell on Thursday.
  • Analysts expect Broadcom’s revenue to grow from a year ago, while net income is seen declining.
  • Artificial intelligence is expected to be a key theme for Broadcom, with investors likely watching for AI sales growth and updates on the company’s full-year AI revenue outlook.

Broadcom (AVGO) is set to report earnings for the third quarter of 2024 after the closing bell on Thursday with artificial intelligence (AI) likely to take center stage.

Investors will watch for updates on the company’s quarterly AI-related sales and outlook as well as a potential announcement about ChatGPT maker OpenAI becoming a new custom AI chip customer.

Analysts expect revenue to come in at $13.04 billion, up from $8.88 billion in the year-ago period, according to estimates compiled by Visible Alpha. Net income is projected to be $2.94 billion, down from a year earlier, when earnings were $3.3 billion. Diluted earnings per share (EPS) is expected to fall. The company this summer split its stock 10-for-1 stock.

   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 benefited from the AI boom through offerings including custom AI chips for tech giants. Analysts expect the company’s AI sales to grow to $3.25 billion, per consensus estimates compiled by Visible Alpha, more than triple the year-ago period, and representing sequential growth.

UBS analysts earlier this week identified Broadcom’s AI-related segments, as well as the integration of VMware, a software firm that Broadcom acquired last year, “as the primary drivers of sequential growth.”

Broadcom could lift its AI-related full-year revenue outlook. Last quarter, the company increased its outlook for the year to $11 billion from $10 billion, a figure that seems conservative given the analyst estimates for the third quarter.

Business Spotlight: OpenAI Could Be New AI Chip Customer

Citi analysts said Thursday that they believe that Broadcom has secured Microsoft-backed (MSFT) OpenAI as a new AI custom chip customer and could announce the deal in its earnings report.

Broadcom has claimed its position in the AI space by helping Big Tech companies create custom chips to run AI workloads. Broadcom designs such chips for companies including Alphabet’s (GOOGLGoogle, Meta Platforms (META), and TikTok owner ByteDance.

Broadcom shares finished today up nearly 4%. The shares are up more than 40% this year through Friday’s close.

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