(Bloomberg) — Broadcom Inc., a key maker of chips for phones, networking gear and servers, gave a bullish outlook for the current period, signaling that demand remains strong among data-center operators and other customers.
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Revenue in the fiscal second quarter will be about $7.9 billion, the company said Thursday in a statement. That compares with an average analyst estimate of $7.41 billion, according to data compiled by Bloomberg.
Broadcom’s products are essential parts in a wide range of technology, and its customer list includes many of the world’s largest companies. That makes its projections a bellwether for the chip industry and the broader economy.
Some of the biggest spenders on technology — so-called hyperscalers, such as Alphabet Inc.’s Google — use Broadcom’s networking chips in their data centers. Apple Inc. also relies on Broadcom connectivity chips in the iPhone to connect to Wi-Fi networks and peripheral devices.
“Broadcom’s record first-quarter results were driven by strong enterprise demand, and continued investments in next generation technology by hyperscale and service providers,” Chief Executive Officer Hock Tan said in the statement. “Our second-quarter outlook projects year-over-year growth to accelerate.”
The stock rose as much as 4.8% in extended trading following the announcement. The shares had fallen 13% this year through Thursday’s close, in line with a broader decline of shares listed on the Philadelphia Stock Exchange Semiconductor Index.
Chipmakers have benefited from surging demand, but also have had to navigate supply-chain problems and shortages, which have held back production of everything from smartphones to vehicles. Tan has said that the company has as many orders as it can fill for the rest of this year and into part of 2023.
Tan has been more outspoken and proactive than some peers in addressing shortages. He told customers he needed orders well in advance of normal to guarantee supply. Tan also instituted a noncancellation policy and has deliberately not taken some business when Broadcom deemed that device makers were asking for more than they needed.
He’s cited those policies and a lack of inventory as evidence that the chip industry isn’t about to suffer a supply glut. But he’s also refused to back down from his long-term view that overall semiconductor growth will be slow as the industry matures.
In the fiscal first quarter, which ended Jan. 30, Broadcom’s profit rose to $8.39 a share, excluding some items. Revenue jumped 16% to $7.71 billion. Analysts had predicted a profit of $8.13 a share on sales of $7.6 billion.
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