Broadcom (NASDAQ:AVGO) has unveiled an extended partnership with Google Cloud, geared towards fostering innovation within enterprises. This collaboration encompasses a range of initiatives, including optimizing Broadcom’s VMware workloads for Google Cloud, joint go-to-market efforts, enhancing offerings on Google Cloud Marketplace, and integrating Broadcom’s products with Google Cloud’s generative AI capabilities.
The partnership aims to leverage Google Cloud’s capabilities for VMware workloads, enhance user experiences, and streamline operations with generative AI. It will involve joint product development and go-to-market strategies to better support mutual customers and identify growth opportunities.
As part of the collaboration, Broadcom intends to broaden its offerings on Google Cloud Marketplace, offering customers access to solutions such as Symantec Network Protection for scalable deployment. Additionally, customers can leverage previously available Marketplace offerings, including Broadcom’s Agile Operations solutions.
A notable aspect of the partnership is the forthcoming portability of VMware Cloud Foundation licenses to Google Cloud VMware Engine, expected to be available by July. This will enable customers to utilize subscriptions flexibly across both Google Cloud VMware Engine and their on-premises data centers, simplifying infrastructure management and integrating Google Cloud’s AI/ML capabilities.
Broadcom’s Strong Performance in AI Space
Broadcom shares have surged 19.5% year to date, surpassing the Zacks Computer & Technology sector’s return of 11.4%. The company has been buoyed by its extensive range of semiconductor offerings and a diversified portfolio.
Recently, Broadcom unveiled Bailly, the world’s premier 51.2 terabits per second (Tbps) co-packaged optics (CPO) Ethernet switch. This groundbreaking product integrates cutting-edge silicon photonics technology with Broadcom’s renowned StrataXGS Tomahawk 5 switch chip, setting new standards for efficiency and performance in AI infrastructure.
Broadcom’s innovative manufacturing approach ensures high-volume production of Bailly, leveraging proven CMOS foundry processes and advanced packaging technologies. Moreover, the company’s collaboration with cloud service providers and system integrators underscores its commitment to accelerating the adoption of CPO platforms, ushering in a new era of power-efficient, cost-effective AI clusters.
AVGO has witnessed robust adoption of AI and strong deployment of generative AI. In the first quarter of 2024, under its semiconductor segment, AI revenues quadrupled year on year to $2.3 billion, despite sluggish enterprise and telco end markets.
Broadcom anticipates fiscal 2024 AI revenues of approximately $10 billion, up from previous guidance of $7.5 billion, accounting for 35% of semiconductor revenues, up from previous guidance of 25%. Networking revenues are expected to surge 35% year over year, driven by accelerated deployment of networking connectivity and expansion of AI accelerators within hyperscalers.
For fiscal 2024, AVGO maintains revenue expectations of $50 billion and an adjusted EBITDA margin of 60%.
The Zacks Consensus Estimate for fiscal 2024 stands at $50.35 billion, reflecting a 40.57% year-over-year growth. The consensus estimate for earnings is $46.92 per share, indicating a 0.2% decrease over the past 30 days but representing an 11.05% year-over-year growth.
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