Shares of the chipmaker Broadcom Inc. trended higher today after the company reported financial results that surpassed Wall Street’s estimates.

It also raised its forecast for the year and announced a 10-for-1 stock split that will come into effect next month. The company reported fiscal second-quarter earnings before certain costs such as stock compensation of $10.96 per share, beating Wall Street’s forecast of $10.84, while revenue rose 43% from a year earlier, to $12.94 billion, ahead of the $12.03 billion analyst consensus estimate.

The strong results were not enough to help Broadcom boost its bottom line, though, with its net profit coming to $2.12 billion, down from a $3.48 billion net profit one year earlier.

According to Broadcom, its results were driven by strong demand for artificial intelligence-related chips and the integration of VMware, which was acquired late last year. Excluding the revenue boost from VMware, its sales rose just 12% from a year earlier.

Looking forward, the chipmaker said it’s upping its fiscal 2024 forecast. It’s now calling for total revenue of around $51 billion, up from its previous target and slightly higher than the Street’s consensus estimate of $50.42 billion.

Broadcom specializes in manufacturing advanced networking chips that are used to move vast amounts of data by AI applications such as OpenAI’s ChatGPT, and it has benefited immensely from enterprises investing in the AI boom.

Revenue from its semiconductor solutions business unit, which houses both its networking and custom chip segments, increased by 6%, to $7.2 billion in the quarter. Within that segment, $3.1 billion in sales was attributed to AI chips. For instance, Broadcom works closely with Google Cloud to design that company’s tensor processing units, which are specialized chips for AI and high-performance computing workloads.

On an earnings call with analysts, Broadcom Chief Executive Hock Tan (pictured) said the company’s hyperscale customers are accelerating their investments to scale up their AI computing clusters. “To that end, we have just been awarded the next-generation custom AI accelerators for these hyperscale customers of ours,” he said.

Third Bridge analyst Lucas Keh was bullish on Broadcom, saying the chipmaker is well-placed to take advantage of the AI boom because it dominates the market in chips for 800-gigabyte networking switches, commanding a 60% overall share. “This is why it’s first choice in many data center and AI infrastructure build-outs, with its only real challenger being Nvidia’s NVlink,” Keh said.

In addition, he believes Broadcom can leverage its strong relationship with hyperscalers such as Google and Meta Platforms Inc. to ignite further growth. “Our experts note additional yearly revenue opportunities of $5 billion with Google and $2 billion with Meta for its custom ASIC solutions,” he added.

Revenue from Broadcom’s infrastructure software segment more than doubled in the quarter, to $5.29 billion, driven by the acquisition of VMware. That came in well ahead of the Street’s consensus estimate of $4.6 billion.

The company added that VMware’s revenue is one of the factors behind its revised outlook for the full year.

Broadcom’s stock jumped more than 10% in extended trading on today’s results. Prior to today, the stock had already gained more than 30% in the year to date, having almost doubled in value in 2023.

Looking forward, Broadcom said it intends to carry out a 10-for-1 stock split in order to make its shares more affordable to retail investors. Split adjusted trading is set to begin on July 15, officials said.

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