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Chip -giant Broadcom NASDAQ: AVGO Recently published quarterly results in which many claim that the party of artificial intelligence has not ended. The market reaction to the results of the company contrasted sharply with its competitor Marvel Technology NASDAQ: MrvlThe field Marwell released his profit in 4 quarter of 2024 on March 5. After that, the shares fell, having lost almost 20% of their value.

Broadcom today

$ 190.54 -4.44 (-2.28%)

As of 04:00 on the East

52-week range

$ 119.76

▼

$ 251.88

Dividend yield

1.24%

P/e ratio.

155.42

Value is valuable

$ 231.48

It was a slightly shock wave that sent fears through those bulls in the Revolution of AI. Demonstrating the similarity in his business, Marvella’s results also claimed Broadcom by 6%.

Broadcoma earnings in just one day caused a much more positive reaction. The shares increased more than 8%, handing over some of the problems caused by Marvell.

What explains these completely different results, and why is Broadcom still strong investments in the field of artificial intelligence? This analysis will compare the results of both companies and emphasize key management ideas.

Revenue comparison: Broadcom beats expectations and expansion of the pipeline

For Marvell, his income was by no means bad. The company has very little exceeded the estimates of income, adjusted profit per share (EPS) and the management in the next quarter for both numbers. However, Broadcom shone in comparison. The company exceeded the estimates of income and adjusted EPS by more than 2% and 6%, respectively. His leadership for the next quarter was 190 million dollars higher than predicted, which amounted to more than 1%. Adjusted profit to interest, taxes, depreciation and depreciation leadership (EBITDA) became higher than expected, similar to the figure in dollars. This was 2% higher than predicted.

In general, these figures may not seem massive blows, but they were enough for the markets to be excited enough to significantly increase the company’s rating. Many decisive technological actions should have significantly surpassed estimates and increase the leadership in order to allow a drop in shares. This was especially true for Broadcom and Marvell in this quarter. Markets hoped that recent announcements of hyperskale firms investing hundreds of billions in the AI ​​infrastructure would lead to significant blows.

Broadcom can be a company that uses this hope. In addition to rhythm and increase, this gave interesting comments that excited investors. The leadership mentioned that he works with two new hyperscal clients to create user chips of artificial intelligence accelerator, in addition to two other hypercalists, with whom he previously discovered that he was working. This was a particularly encouraging sign showing that Broadcom continues to expand its transactions. Marwell did not provide such comments. In general, investors should consider this as a strong sign for the future Broadcast.

VMware: Ace Broadcom in the sleeve

One of the big advantages of Broadcom compared to Marvell in terms of investing in AI is its software. The acquisition of VMware was extremely successful. Broadcom significantly reduced its number of staff in VMware and transferred many customers to a repeating subscription model, and not a license for life time.

In addition, the company improves the previous VMware products and expands the capabilities of the key product VMware, VSPhere. VSPhere is a virtualization software that allows the server to divide its computational resources into several workloads. Without software for virtualization, the server often has not been enough, since one working load would not be enough to use all its power.

VMware has expanded this concept to the entire data processing center via VMware Cloud Foundation (VCF). It also serves large AI users with VMware Private Foundation. He adds virtualization for nvidia NASDAQ: NVDA Graphic units of processing (graphic processors). This allows the virtualization of the working loads of AI.

In general, this provides a very valuable product for large enterprises that want to launch the working loads of AI in their private data centers. This is, unlike them to launch them in a public cloud, like Microsoft NASDAQ: MSFT Azure. This personal cloud method is ideal for ensuring data security. These changes allowed Broadcom to significantly increase the VMware margin, at the same time impressively growing income. VMware gives Broadcom two large ways to benefit from AI proliferation: hardware and software. For Marvell, the equipment really holds a torch.

Avgo: Still a strong way to play

Broadcom seems to be ready to continue his impressive success in the landscape of investment of artificial intelligence. Strong growing software segments for semiconductors and infrastructure of the company provide them with two sources of income with significant AI winds. In addition, the company’s margin should continue to grow, since the software becomes a larger part of the company’s business.

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