Broadcom shares trade higher on earnings, AI forecast

Broadcom shares traded slightly higher after its second quarter results beat analyst estimates. The Yahoo Finance Live team breaks down the report.

Video Transcript

JULIE HYMAN: All right. Let's talk about some other movers now. Broadcom stock moving higher this morning after faltering in the premarket. Let's take a check on the shares here to see how they're going. Up about 2%. The company touting the potential to double its AI sales this year. The chipmaker also beat on its top and bottom line for its second fiscal quarter, but mentioned that softening chip demand is causing some inventory glut. Initially, the shares were down because investors seem to be focusing more on the current slowing sales growth rather than on the potential increase in sales related to a-- even as Hock Tan the CEO said that, you know, eventually, 25% of their sales could be linked to AI.

BRAD SMITH: It just goes to show how much of not just a demand that you need to show in this at least earnings season where we've seen record number of mentions among S&P 500 companies of artificial intelligence, not just the talks of demand, but also a timeline as to when you can monetize, what the margins might look like on some of those investments, and even the level of investment. I think back to even Meta Platforms, they said, yeah, it's a huge opportunity for themselves, but they can't disclose. They don't even know how much they're going to be spending on it.

So for investors that are looking for that return on investment, a return on capital spend from some of these companies, it comes from these companies also disclosing how much they're going to be spending on it where resources, both on the capital front, on the human resources side that still needs to move that technology forward, how that's going to be allocated. And so I think that still is-- despite all the mentions we saw this earnings season, still murky even in many of the technology companies that have the best play at seeing some type of artificial intelligence benefit to their business.

JULIE HYMAN: Yeah. Well, we need the proof.

BRAD SMITH: We need proof.

JULIE HYMAN: Yeah.

BRAD SMITH: Yeah.