Broadcom's Stock Soars on Revenue Outperformance and Stock Split

Broadcom Reports Strong Second-Quarter Revenue but Falls Short on Earnings

Broadcom (AVGO) recently reported its second-quarter revenue, which beat analyst estimates, but fell short on earnings projections. The company attributed the revenue beat to artificial intelligence (AI) products. In addition, Broadcom announced a 10-for-1 forward stock split, causing shares to surge over 12% in extended trading Wednesday.

Strong Revenue Growth Driven by AI

Broadcom reported an impressive revenue of $12.49 billion for the fiscal second quarter of 2024, representing a 43% increase from the same period last year. This figure exceeded analysts' expectations and was primarily fueled by robust demand for AI products. The company's AI product revenue reached a record high of $3.1 billion during the quarter.

However, despite the strong revenue performance, net income for the quarter came in at $2.12 billion, or $4.42 per share. This marked a decline from the $3.48 billion, or $8.15 per share, reported in the corresponding period a year ago, and fell short of analysts' projections.

Q2 FY24	Analyst Estimates for Q2 FY24	Q2 FY23
Revenue	$12.49 billion	$12.04 billion	$8.73 billion
Diluted Earnings Per Share	$4.42	$4.97	$8.15
Net income	$2.12 billion	$2.26 billion	$3.48 billion

Forward Stock Split and Share Price Surge

Broadcom's CEO, Hock Tan, highlighted the company's AI-driven results and acknowledged VMware as contributing significantly to the quarter's success. In response to the favorable revenue growth and to enhance ownership accessibility for investors and employees, Broadcom announced a 10-for-1 forward stock split. The move is expected to make owning Broadcom stock more attainable for a wider range of stakeholders.

As part of the stock split plan, stockholders of record after market close on July 11 will receive nine additional shares for each share held, with split-adjusted trading scheduled to begin on July 15. The announcement of the forward stock split, combined with the positive revenue results, caused Broadcom shares to soar over 12% to $1,687.20 during extended trading hours on the day of the release.

In conclusion, Broadcom's strong second-quarter performance, driven by AI products and bolstered by VMware collaborations, exceeded analyst estimates for revenue. The subsequent announcement of a forward stock split further boosted investor confidence, as reflected in the significant surge in share price during extended trading hours following the release of the earnings report.

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