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Broadcom (AVGO) stock gains after releasing stronger-than-expected first quarter results and second quarter outlook driven by artificial intelligence (AI) chip sales.
CFRA Research senior equity analyst Angelo Zino joins Julie Hyman and Josh Lipton on Market Domination Overtime to share his reaction to the chipmaker's earnings print.
Zino tells Yahoo Finance that the earnings beat is "really the story for Broadcom" since "they continue to improve on the earnings side of things," with AI being "clearly what's causing the beat, at least on the top line."
The analyst highlights Broadcom's prime positioning as a custom AI chipmaker. "When you look at the AI ecosystem out there, it's really been GPUs and Nvidia's GPUs that have kind of driven the AI infrastructure market out there," while on the custom silicon side, the "second alternative" is Broadcom.
Zino adds, "Over the next couple of years, what's really going to kind of drive that top line more than anything is going to be that custom silicon business, [which] does have lower corporate gross margins ... [but] this is a company that will continue to see those margins widen here over time."
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This post was written by Naomi Buchanan.