Broadcom's Fiscal Performance: Revenue Challenges and Outlook

Broadcom's revenue struggles highlight high investor expectations despite strong demand signals and increasing bookings.

### Broadcom's Fiscal Performance: Mixed Results Amidst Industry Trends
* 📊  Broadcom reported overall revenues of **$14 billion** for the fiscal fourth quarter, which fell short of expectations, while the full fiscal year sales reached **$12 billion**, indicating a **solid performance despite challenges**.
* 📉  The legacy businesses of Broadcom are currently **underperforming**, a trend that is consistent with reports from other industry peers, as Broadcom was the **last major company to announce its results**.
* 🔍  Investors may have anticipated a stronger upside in revenue growth, as the company projected an **upside of $8 to $12 billion**, reflecting a broader trend of **high expectations** during this earnings season.
* 📱  The anticipated iPhone launch did not provide significant new insights into the trajectory of Broadcom's business, with **no remarkable seasonal outlook** observed among key chip players despite Apple preparing for a **5 to 10% increase in shipment volume**.
* 🤔  Truist Securities highlighted the **unpredictability and lumpiness of revenue growth** for Broadcom, raising questions about **when actual customer orders for chips will materialize**.
* 📈  Despite these fluctuations, there is an expectation for **stronger growth** in Broadcom's board, S6, and connectivity businesses next year, although the concentration of just **three major customers** may contribute to revenue variability.
* 🔄  The market reaction to Broadcom's results echoes past experiences with other companies like Nvidia, where **solid performances did not meet heightened expectations**, yet demand signals and order backlogs remain robust, indicating **no fundamental risks in the chip sector**.

Okay. So the fiscal fourth quarter overall revenues, 14 billion. Not as strong as hoped. Full fiscal year, $12 billion in sales. That's good. So we're basically concluding that the sort of more legacy businesses for Broadcom aren't doing as well right now. Was that your reads? Exactly. I mean, that was the only negative, but in my opinion, it was not very surprising. We have heard the same story across most of its peers who have already reported, because, remember, Broadcom is the last one to report. So that should not have caused this kind of a reaction. I think another thing going here is the air was upside 8 to 12 billion. Maybe investors were hoping for even stronger upside there. That's been the story of this entire earnings season. I do want to look at the sort of non-core part, because as you know, Apple on Monday and the iPhone, did we learn anything new about that business

and perhaps the trajectory of it? But really from along with Broadcom and Qualcomm and other chip players, we have not seen significantly stronger than seasonal outlooks coming into this iPhone launch, despite the reports that we have been hearing that Apple iPhone shipments are preparing for 5 to 10% higher shipment volume this year. Now, 2023 was a down year. So we do expect volumes to be higher because of that. But we are not seeing any taking anything out of ordinary from at least Broadcom yesterday. I want to go to what sort of Truist Securities is saying. I hate to name the people on the street because your expertise is so important to us, but he's saying basically it's unpredictable, it's lumpy when it comes to revenue growth because of as and when we're going to get customers named. We were thinking that might be more. When will we hear of actual customers wanting their chips made by Broadcom?

Well, at this point, it's not clear. But, you know, the fact about being lumpy, that's true. However, it does. That should not take away anything from the strength of the growth. We expect the board, the S6, and the connectivity businesses to grow even stronger next year. And remember, these are still very highly concentrated few customers, three at this point. So you are going to expect lumpiness from quarter to quarter as they adjust their timing of purchases and build out. We asked you yesterday a slightly unfair question, but I ask it to you again because you are a fundamentally driven person, but the market just seemed to be so exuberant around these air names. We've got a deja vu. Nvidia sold off when its numbers were good. Broadcom doing the same. Exactly. I mean, what we are seeing is even solid or strong reports are not strong enough because the expectations are just

stronger, higher than that. But I just remind people to go back to fundamentals and see. We saw the same thing again from Broadcom. We saw from Nvidia. The demand signals keep going stronger and stronger. Their bookings and backlogs continue to increase. So there's no such real fundamental risk factors here, especially when it comes to chips.

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Broadcom's Fiscal Performance and Outlook

Broadcom's fiscal fourth quarter revenues were $14 billion, falling short of expectations, while the full fiscal year sales reached $12 billion.

The company's legacy businesses are struggling, a trend seen across its peers.

Despite Apple's higher iPhone shipment volume this year, Broadcom's outlook for the non-core business and chip demand remains unpredictable.

The company's growth is expected to strengthen next year, driven by a few concentrated customers.

Quarter-to-quarter lumpiness in sales is anticipated due to the customers' timing of purchases and build-out.

Despite solid reports, the market's high expectations are leading to sell-offs, similar to the patterns seen with Nvidia and Broadcom.

Chip manufacturers like Broadcom and Nvidia are experiencing increasing demand signals, with rising bookings and backlogs.

The fundamental risk factors in the chip industry appear minimal.

The trend of strong demand is expected to continue.