Broadcom is poised for biggest growth in four years as AI fuels development.

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(Bloomberg) — Broadcom Inc., Apple Inc. And a chip supplier to other big tech companies is on track for its biggest increase in four years, driven by strong demand for artificial intelligence products, after topping estimates in its latest results.

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Second-quarter profit was $10.96 per share, excluding certain items, the company said in a statement Wednesday. That compares to an average estimate of $10.80. Revenue rose to $12.5 billion, compared with estimates of $12.1 billion.

The company said sales for the full fiscal year, which runs through October, will be about $51 billion. Analysts had estimated about $50.6 billion, and Broadcom had previously said the number would be closer to $50 billion.

The race to build artificial intelligence systems has benefited semiconductor companies such as Broadcom, even as Nvidia Corp. It doesn't sell high-priced AI chips made by Broadcom, which offers a range of components used in computing and networking — including those that matter. To data centers – promoting it from the trend. Chief Executive Officer Hock Tan said Broadcom's acquisition of VMware also boosted the results.

“Broadcom's second quarter results were once again driven by AI demand and VMware,” he said in the statement. Revenue from AI products alone reached a record $3.1 billion in the period, Tan said.

Tan predicts that total AI sales will exceed $11 billion by fiscal year 2024. And non-AI chip revenue, which had been sluggish recently, fell in the second quarter. “There is likely to be a modest recovery in the second half of FY24,” he said during a conference call with analysts.

Broadcom shares rose 14 percent in premarket trading Thursday. If the gain holds, it will be the biggest intraday gain since March 2020. The stock has risen 34% this year to $1,495.51 after trading closed in New York on Wednesday.

The Palo Alto, Calif.-based company also announced a 10-for-1 stock split, effective July 15. Broadcom follows Nvidia in taking such a step. The demerger of this company took effect on June 7.

Broadcom's semiconductor division had revenue of $7.2 billion in the three months ended May 5. That compares with an average estimate of $7.12 billion, according to data compiled by Bloomberg. Infrastructure software sales were $5.29 billion, beating forecasts of $4.93 billion.

Broadcom, one of the largest companies in the semiconductor industry, has swelled the ranks through a series of acquisitions by Tan. This makes it a barometer of how the overall chip market is doing.

Data center providers rely on its custom chip designs and networking semiconductors to build AI systems, but the company also sells components for cars, smartphones and Internet access gear. And it's increasingly pushing into software, including products for mainframe computers, cybersecurity and data center optimization.

The acquisition of VMware, completed in November, has been a big part of the software push.

“We're making very strong progress integrating VMware and accelerating its growth,” Tan said on the conference call.

Apple is a top customer: Broadcom supplies key components for the iPhone. During earnings calls, Tan usually gives an update on Broadcom's often contentious relationship with the company, though he refers to it as his “North American customer” or some other vague description.

On Wednesday's call, Tan said Broadcom's relationship with the customer is “deep, strategic and multi-year.”

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