Adds annual forecast in paragraph 2, shares in paragraph 3, background on AI-linked spending and software portfolio in paragraphs 4-8, income in paragraph 9
March 7 (Reuters) - Tech conglomerate Broadcom AVGO.O beat market estimates for first-quarter revenue on Thursday, as cloud providers continue to upgrade data centers to support artificial intelligence, helping drive demand for its advanced chips.
However, the company did update its annual revenue forecast of $50 billion, which still falls short of expectations, likely disappointing investors.
Broadcom's recently high-flying stock dipped about 2% in extended trade. The stock's value had almost doubled in value in 2023.
Still, a generative AI push across the tech landscape has prompted firms to increase spending on infrastructure, pushing demand for Broadcom's chips which allow different parts of large cloud companies' systems to communicate with one another.
Complex data centers, which are involved in the development of generative AI, are obsolete without gear from providers such as Broadcom to support it. This has successfully embedded Broadcom in supply chains, making it one of the larger beneficiaries of AI.
While widely known as a chipmaker, Broadcom's portfolio has widened to include various tech firms such as VMware and software company CA technologies.
Such buyouts have expanded the company's software offerings, which analysts believe contribute significantly to its revenue growth.
The company reported quarterly revenue of $11.96 billion, below analysts' average estimate of $11.72 billion, according to LSEG data.
Broadcom reported adjusted first-quarter income of $5.25 billion, compared with analysts' estimates of $5.01 billion
(Reporting by Arsheeya Bajwa in Bengaluru; Editing by Krishna Chandra Eluri)
((ArsheeyaSingh.Bajwa@thomsonreuters.com; +91 8510015800;))