Investing.com -- Shares in Broadcom (NASDAQ:AVGO) dipped in premarket U.S. trading on Friday, as investors noted that the semiconductor group did not raise its full-year guidance target despite posting better-than-expected fiscal first-quarter results.
California-based Broadcom's stock price has surged by more than 122% over the past year on hopes that it could be a potential major beneficiary of a boom in enthusiasm around artificial intelligence. The firm produces networking chips for data centers -- an area in which many large tech businesses are investing heavily in a bid to support the development of their AI capabilities.
In the three months ended on Feb. 4, AI revenue quadrupled versus the year-ago period to $2.3 billion, Broadcom Chief Executive Hock Tan said in a post-earnings call with analysts on Thursday. Over the full-year, Broadcom's AI operations are now expected to generate more than $10 billion, accouting for over 35% of revenue at its core semiconductor solutions division.
"[T]he AI story is more than just a simple narrative, but is contributing meaningfully to financial results," analysts at Bernstein said in a note.
However, demand at Broadcom's service storage and broadband unit has been "weaker than expected," Tan flagged, due in particular to a cyclical pullback in spending by telecoms and enterprise clients.
Broadcom subsequently reiterated its previous annual outlook for consolidated revenue of $50 billion, or year-on-year growth of 40%. Wall Street estimates had called for a marginally improved forecast of around $50.2 billion
Meanwhile, the company credited its acquisition of tech group VMware for fueling growth at its infrastructure software unit. Revenue at the segment jumped by 153% to $4.57B, ahead of analyst estimates.
First-quarter adjusted earnings per diluted share came in at $10.99, while revenue grew to $11.96B. Analysts polled by Investing.com had called for $10.40 and $11.79B, respectively.
Yasin Ebrahim contributed to this report.