Broadcom Inc. (NASDAQ: AVGO) on Thursday forecast third-quarter revenue above estimates, helped by strong demand for its chips used in data centers and networking gear.
The company said it expects revenue of $7.45 billion to $7.55 billion for the third quarter, up from analysts' estimates of $7.39 billion, according to Refinitiv IBES data.
Broadcom also forecast adjusted earnings per share of $7.05 to $7.15, above analysts' estimates of $6.89.
"We are pleased with our strong performance in the second quarter and our outlook for the third quarter," said Hock Tan, Broadcom's chief executive officer. "We continue to see strong demand for our products across all of our end markets."
Broadcom's shares rose 2.5% in extended trading.
Analysis
Broadcom's forecast is a positive sign for the semiconductor industry, which is facing headwinds from rising inflation and a slowdown in China. The company's strong demand for its chips used in data centers and networking gear is a sign that businesses are continuing to invest in their IT infrastructure.
Broadcom's forecast also suggests that the company is benefiting from the ongoing chip shortage. The shortage has led to higher prices for chips, which has boosted Broadcom's revenue and profits.
Broadcom's strong performance is a good indication that the semiconductor industry is still in a healthy state. However, the company's forecast does come with some caveats. The company is facing rising costs, which could impact its margins. Additionally, the company is exposed to China, which is a major market for its products. If the Chinese economy slows down, it could impact Broadcom's sales.
Overall, Broadcom's forecast is a positive sign for the semiconductor industry. However, the company faces some challenges, such as rising costs and exposure to China. Investors should keep these factors in mind when considering Broadcom's stock.