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Broadcom Options Volume More Than Quadruples After AI-Fueled Earnings Beat

$Broadcom(AVGO)$   options volume more than quadrupled Friday after the semiconductor giant released quarterly financial results that surpassed analysts’ estimates, buoyed by strong demand from artificial intelligence (AI). 

The company that supplies to $Apple(AAPL)$  , $Alphabet(GOOGL)$   and $Meta Platforms, Inc.(META)$   saw its shares jump 8.6% to close at $194.96. That made Broadcom the day’s best performer on $NASDAQ(.IXIC)$   and the $S&P 500 Index (.SPX.US).

About 1.09 million call and put options across 22 expiration dates changed hands, compared with the 20-day average of 265,550, data compiled by Bloomberg show. That landed Broadcom in the fourth spot for the most active stock option, behind $NVIDIA (NVDA.US)$, $Tesla (TSLA.US)$ and $Strategy (MSTR.US)$. 

"We believe AI revenues will continue to grow throughout the year,” driven by strong capital spending by cloud and hyperscalers, with focus on AI infrastructure build-outs, JPMorgan analysts including Harlan Sur wrote in a note yesterday. 

They also cited the contribution to revenue growth from the continued ramp up of Google’s next-gen tensor processing unit (TPU) v6 3 nanometer AI accelerator application-specific integrated circuit (ASIC), the start of Meta Platforms’ 3 nanometer ASIC ramp, and the continued strong adoption of ethernet networking.

Broadcom said late Thursday that it sees revenue rising to about $14.9 billion in the fiscal second quarter ending on May 4, from the $12.48 billion it reported a year earlier. That outlook is higher than $14.59 billion expected by analysts, according to estimates compiled by Bloomberg. 

For the three months that ended on Feb. 2, the company reported revenue climbing 25% to $14.92 billion as semiconductor solutions soared 55%, while infrastructure software surged 45%. The total revenue was better than the $14.61 billion expected by analysts, estimates showed. Adjusted earnings rose 50 cents to $1.60 per share, beating estimates by 6.4%, according to Bloomberg data.  

The stock remains the top pick for JPMorgan analysts in the semiconductor sector, after the company “delivered solid January quarter results on better-than-expected revenues in AI semis.”

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