Hock Tan, CEO of Broadcom.
- In a Monday interview with CNBC's Jim Cramer, Broadcom CEO Hock Tan detailed why the semiconductor company hiked up its guidance for artificial intelligence revenue during its earnings report earlier this month, saying huge enterprises are invested in the products.
- "We are in a segment of the market in AI where we are addressing several hyperscalers," he said. "And these hyperscalers have very strong incentive, ambition to towards building continually, investing in large language models to basically create models that are smarter and smarter."
In a Monday interview with CNBC's Jim Cramer, Broadcom CEO Hock Tan detailed why the semiconductor company hiked up its guidance for artificial intelligence revenue during its earnings report earlier this month, saying huge enterprises are invested in the products.
"We are in a segment of the market in AI where we are addressing several hyperscalers," he said. "And these hyperscalers have very strong incentive, ambition to towards building continually, investing in large language models to basically create models that are smarter and smarter."
Broadcom beat Wall Street's expectations for revenue and earnings, and it guided for $12 billion in AI sales for fiscal 2024, up from a previous estimate of $11 billion. The company designs and develops a number of semiconductor and infrastructure software products that have been in demand as Big Tech ramps up production of data centers and new AI technology.
According to Tan, the AI boom is far from over, as some investors fear. Megacap tech companies will continue to need Broadcom's technology, he said, because each newer, smarter generation of large language model will require more and more "compute" each time. He said the need for these semiconductors is not a "one-year phenomenon," but a "very urgent journey" for Big Tech.
He also addressed a weak spot in the quarter — sales of legacy semiconductors — and claimed that the category is on its way to recovery. Tan claimed that Broadcom has suffered from a "typical hangover" that comes with the upcycle the company saw during Covid.
"We reached bottom about a couple quarters ago, early part of fiscal 2024, and we have since seen, seen sequential growth of our revenue from that bottom," he said. "We're well on the way to recovery, and 25, 26 will be an upcycle for non-AI semiconductors."
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