Published - March 03, 2023 @ 11:17 AM (EET)

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In a deteriorating economy, where consumer and enterprise spending is declining, Broadcom Inc. (NASDAQ:AVGO) "predicted a soft landing" as increased investments in artificial intelligence spur demand for its chips used in data centers.

On Thursday, the chipmaker, which supplies data centers with networking and specialized chips that speed up AI work, said it expects networking revenue to grow 20% in the current quarter. 

During its earnings call, the company also forecasted second-quarter revenue would be about $8.7 billion, above estimates of roughly $8.58 billion, suggesting Broadcom is weathering a slowdown better than many of its peers.

Earlier, Marvell Technology Inc. (NASDAQ:MRVL), another chipmaker that reported earnings, plunged over 9% in extended trading after projecting weaker-than-expected profit margins.

Q1 RESULTS

Broadcom reported sales of $8.91 billion for the first quarter and a net income of $3.8 billion, slightly ahead of Street estimates. Adjusted earnings per share were $10.33, topping estimates of $10.11.

Up from $12.41 billion sequentially, Broadcom ended the quarter with $12.64 billion in cash and equivalents, generating $4.03 billion in cash from operations.

During the earnings call, President and CEO Hock Tan of Broadcom said the company's

"first quarter performance reflects continued strength in infrastructure demand across all our end markets."

By carefully managing supplies, Tan has sought to avoid an inventory glut and rely in part on strict policies that prevent customers from canceling orders.

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Meanwhile, the company showed only moderate growth in the quarter for its wireless unit and will likely continue struggling with a sales decile in the current period compared with a year earlier.

Shares of the company were little changed, up about 0.6% in late trading following the release. While Broadcom outperformed other chip stocks in 2022, they lost some of their shine this year. Compared with an 18% rise for the benchmark Philadelphia Stock Exchange Semiconductor Index, Broadcom is up only 7%.

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