Quick take: October Q revenue guidance largely in line at $9.3B, up 5% y/y. Gen AI driving y/y growth, with Gen AI expected to be 25% of semi revenues in FY24. VMware remains on track for October 30 close.
Guidance in line. Broadcom is guiding for F4Q revenues of $9.27B, up 4% q/q and up 5% y/y, largely in line with consensus $9.28B. Both Semiconductor and Software to grow modestly y/y. Software business seeing strong ARR of $5.3B, with renewals at 115% of expiring contracts.
Actuals largely in line. Revenues of $8.9B, up 5% y/y are largely inline with consensus. Hyperscale contined to grow double digits y/y, but enterprise and telco spending moderated. Semiconductor business excluded Gen AI, stabilized at $6B per quarter.
Semiconductor guidance – Overall semiconductor growth to be up low to mid-single digit percentage y/y, and excluding generative AI, semiconductor to be largely flat. AI revenues continue to accelerate, with AI expected to be over 25% of semiconductor revenues in FY24.
- Networking (40% of revenues) is expected to increase at least 20% y/y, driven by generative AI.
- Switches, routers and custom Silicon AI chips are driving growth as AI clusters are being scaled among hyperscale customers.
- Wireless revenues of $1.6B (24% of semiconductor revenue) to decrease low single digit % y/y, and increase over 20% q/q, driven by seasonal smartphone launches.
- Server storage connectivity (17% of semiconductor) expected to decline mid-teens y/y, driven by a difficult y/y compare.
- Broadband (16% of semiconductor revenue) to decline high single digits y/y.
Software segment revenues are expected to be up mid-single digit y/y.
- ARR $5.3B in Q3, with renewal rates of 115% of expiring contracts and strategic accounts averaged 125%.
| Segment | Q3’22 (Aug Q) | Q3’23 (Aug Q ) | Y/Y |
|---|---|---|---|
| Semiconductor | $6.62B | $6.94B | +5% |
| Infrastructure software | $1.84B | $1.94B | +5% |
| Total | $8.46B | $8.88B | +5% |
VMware update
VMware remains on track for October 30 close. Approvals from a few jurisdictions (including China) remain outstanding, and are expected to be cleared by October 30, per Broadcom comments.