Broadcom (AVGO) Strengthens Prospect With Google Cloud Deal

Core Insights - Broadcom has expanded its partnership with Google Cloud to enhance innovation for enterprises, focusing on VMware workloads and generative AI integration [1] - The collaboration includes joint go-to-market initiatives and the enhancement of offerings on Google Cloud Marketplace [1] Partnership Details - The partnership aims to optimize VMware workloads for Google Cloud and improve user experiences through generative AI [1] - Broadcom plans to expand its offerings on Google Cloud Marketplace, including solutions like Symantec Network Protection and Agile Operations [2] - A key development is the portability of VMware Cloud Foundation licenses to Google Cloud VMware Engine, expected by July, allowing flexible subscription use [2] AI Demand and Financial Performance - Broadcom's shares have increased by 19.5% year to date, outperforming the Zacks Computer & Technology sector's 11.4% return [3] - The company launched Bailly, a 51.2 Tbps co-packaged optics Ethernet switch, setting a new standard for AI infrastructure [3] - AI revenues in Q1 2024 quadrupled year on year to $2.3 billion, with fiscal 2024 AI revenues expected to reach approximately $10 billion, accounting for 35% of semiconductor revenues [4] Revenue Projections - Networking revenues are projected to grow by 35% year over year due to increased networking connectivity and AI accelerator deployment [5] - For fiscal 2024, Broadcom anticipates revenues of $50 billion and an adjusted EBITDA margin of 60% [5] - The Zacks Consensus Estimate for fiscal 2024 revenue is $50.35 billion, indicating a year-over-year growth of 40.57% [5]