Semiconductor firm Broadcom Inc. forecast first-quarter revenue above Wall Street’s expectations and announced a $10 billion share buyback plan on Thursday, banking on a rebound in enterprise spending and continued demand from cloud computing companies.
The company’s shares rose more than 5% to $617 in extended trading.
Analysts point to strong near-term demand for Broadcom’s chips, with higher contributions from its wireless segment as telcos spend more to roll out 5G technology, and continued growth in its broadband division. There is strength. The company counts Apple Inc. and Samsung Electronics as major customers.
Broadcom stands to benefit from higher demand for its data-center and server chips, as hybrid working models and rapid shifts by businesses to the cloud in a post-pandemic world.
The San Jose, Calif.-based company forecast first-quarter revenue of about $7.60 billion, higher than analysts’ average estimate of $7.25 billion, according to Refinitiv data.
Fourth-quarter revenue rose 15% to $7.41 billion, well below estimates of $7.36 billion, while earnings per share of $7.81 were also better than expected.
Broadcom has also diversified beyond its core chip business and entered the lucrative software sector, at a time when the world grapples with supply chain disruptions and an industry-wide chip shortage. Its infrastructure software revenue rose 8% to $1.77 billion in the fourth quarter.
The new share repurchase program is in effect until the end of next year, the company said in a separate statement.
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