US Broadcom Announces 10-for-1 Stock Split... Earnings Outlook Also Raised

U.S. semiconductor company Broadcom announced a 10-for-1 stock split. Riding the recent artificial intelligence (AI) rally, it also raised its earnings forecast. Fueled by these positive factors, Broadcom's stock price surged nearly 15% in after-hours trading.

[Image source=Reuters Yonhap News]

According to daily publications such as The Wall Street Journal (WSJ), Broadcom announced on the 12th (local time) that it will proceed with a 10-for-1 stock split to make stock investments easier for individual investors and employees. This will take effect starting from trading on the 15th of next month.

Typically, when a stock split occurs, the price per share decreases, making it easier for small individual investors to invest and expanding capital inflows. Bank of America (BoA) recently reported that companies that have undergone stock splits have an average one-year return of 25%, which far exceeds the S&P 500 average return of 12%. Earlier, the 'AI leader' Nvidia also executed a stock split.

Along with this, Broadcom announced that its second-quarter (February to May) revenue rose 43% year-over-year to $12.49 billion, surpassing market expectations. Software infrastructure revenue was confirmed to have nearly tripled. Adjusted quarterly earnings per share, excluding one-time items, were $10.96, exceeding Wall Street estimates of $10.84.

Furthermore, buoyed by AI benefits, Broadcom raised its annual revenue target for fiscal year 2024 from $50 billion to $51 billion, also surpassing Wall Street estimates. Additionally, it announced that the common stock dividend to shareholders registered as of June 24 will be $5.25 per share, payable on June 28.

On this day, Broadcom's stock closed the regular session on the New York Stock Exchange at $1,495.51 per share, up 2.36% from the previous close. Subsequently, in after-hours trading, it jumped nearly 15% to reach the $1,714 level.

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