Broadcom CEO: "Strong demand for AI semiconductors! Non-AI business below expectations, recovery expected in the future [earnings summary]"

●The company has once again revised its full-year AI-related revenue outlook upwards. The increase exceeded market expectations, but did not push up the stock price. It is also believed that investors are becoming more cautious ahead of the employment statistics on the following day, influencing the situation.
●The company once again revised upwards its full-year AI-related revenue forecast. The increase exceeded market expectations but did not push up the stock price. It is believed that the cautious stance of investors ahead of the employment statistics on the following 6th also had an impact.

◇The AI business is doing well, and the non-AI business is expected to bottom out and recover in 4Q.
●At the earnings call, the management commented that the demand for AI is still strong. Reflecting the strong demand for AI semiconductors, the full-year AI-related revenue forecast has been revised upwards from $11 billion to $12 billion, exceeding market expectations.
●Considering the positive outlook for AI semiconductors and the lower-than-expected 4Q total revenue guidance, the growth of the non-AI business is expected to be below market expectations.
●The management explained that the majority of the non-AI semiconductor business is either in a worst-case scenario or has emerged from the worst-case scenario. In some of these markets, although revenue is significantly below the same period last year, it is starting to grow again compared to the previous quarter. The non-AI-related business has hit bottom and is expected to recover in 4Q.
●"The growth rate of the AI-related business exceeds that of other businesses. This is due to strong demand from hyper-scale customers for both AI networking and custom AI accelerators. We are confident that AI will continue to maintain strong performance next year," said the management.

Wall Street's evaluations vary, but positive evaluations are prominent.
After the earnings reports, Fubon Securities lowered its target stock price, while Morgan Stanley, Goldman Sachs, and JP Morgan raised their target stock prices.

Demand for custom AI semiconductors and AI network products remains strong, with AI-related revenue steadily expanding in the past two quarters. The positive trend is expected to continue next year, making Broadcom a true AI semiconductor stock.

The recent earnings report revealed a scenario where non-AI businesses are dragging down performance. The disappointment with the underperformance of non-AI businesses is believed to be influenced by the current concerns over the slowdown in the U.S. economy. Although the company's non-AI businesses show some irregularities, overall they seem to have reached a bottom and indications point towards a recovery in the fourth quarter. If this becomes even clearer in the fourth quarter earnings report, it is expected to help alleviate investors' concerns.

Considering the company's unique position in the AI semiconductor market, it can be said that it is worth paying attention to as the next AI semiconductor stock after NVIDIA. While it is necessary to pay attention to the investment environment for semiconductor stocks and the direction of the US economy, it is considered to have investment potential in the medium to long term.