By Dhirendra Tripathi
Investing.com – Broadcom Inc. (NASDAQ:AVGO) stock traded 2.8% higher premarket after the company promised another strong quarter, banking on demand from enterprise, and cloud clients for its semiconductors and infrastructure software solutions.
"Enterprise spending is on fire ... and we are seeing a big part of that," Reuters quoted President and CEO Hock Tan as telling analysts.
Net revenue in the first quarter ended January 30 grew 16% to a record $7.7 billion and the company projects this to rise to $7.9 billion in the current one, growing on a year-on-year basis as well.
"Broadcom's record first quarter results were driven by strong enterprise demand, and continued investments in next generation technology by hyperscale and service providers," Tan said in a statement.
Hyperscalers refers to big spenders on technology, the likes of Alphabet (NASDAQ:GOOGL), Apple (NASDAQ:AAPL), Amazon (NASDAQ:AMZN) and Facebook (NASDAQ:FB). Alphabet’s Google uses Broadcom’s networking chips in its data centers and Apple deploys Broadcom chips in iPhones to connect to Wi-Fi networks and peripheral devices. Surging demand for 5G technologies is another growth driver at Broadcom.
The pandemic fueled the demand for mobiles, laptops, and other gadgets and consequently the demand for chips that go into those devices.
Demand for Broadcom’s electronic components was up about 20% last year and is on course for a similar increase in 2022, Bloomberg said. However, Tan expects return of historical rates of about 5%.
“If anyone tells you otherwise, don’t believe it, because it has never happened,” he said.
Adjusted profit per share in the first quarter grew 27% to $8.39 to beat estimates.