- Chipmaker beats forecasts and issues strong guidance
- Total order backlog hits record $110 billion
- Morgan Stanley ups price target to $382
Investors have been getting nervous about AI’s power to propel stocks higher, but such concerns were swept aside by Broadcom (AVGO:NASDAQ), which clocked a record third quarter, beating forecasts and offering strong guidance.
The chipmaker’s stock rallied nearly 7% in after-hours trading as investors cheered the quarterly report that left most enthused by remarks about a huge order from a client for custom chips.
Broadcom Q3 revenue clocked a 22% year-on-year jump to $16 billion on strong demand for custom AI accelerators, networking chips, and VMware products. AI revenue in Q3 surged 63% to $5.2 billion, making up nearly 60% of the firm’s total semiconductor revenue.
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‘We expect growth in AI semiconductor revenue to accelerate to $6.2 billion in Q4, delivering eleven consecutive quarters of growth, as our customers continue to strongly invest’, president and CEO Hock Tan told analysts.
The company also generated record cash flow of $7 billion, marking 47% year-on-year growth. On the earnings call, Tan stated that bookings remained strong, with the consolidated backlog reaching a record $110 billion.
Morgan Stanley analysts were impressed, upping their price target for Broadcom stock from $357 to $382, the investment bank citing the company’s credible management team and upcoming growth opportunities, particularly in AI technologies. That’s versus the pre-release close of $306.
