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