The artificial intelligence (AI) boom has been blowing through the semiconductor industry and Broadcom continues to ride the wave.

The California-based tech company unveiled a stellar second-quarter performance on Thursday, exceeding analyst expectations on both earnings and revenue. The company also announced a highly anticipated 10-for-1 stock split that will take effect July 15, a move that echoes a similar decision by fellow chipmaker Nvidia earlier in June.

As AI continues to revolutionize industries, chipmakers like Broadcom are at the forefront, providing the essential hardware that powers the technology.

Broadcom’s growth and the AI boom

The exponential growth of AI requires immense processing power, and that’s where companies like Broadcom come in.

Broadcom (AVGO) specializes in developing a wide range of semiconductors, the tiny electronic components that form the brains of modern devices. Their products are integral for building the powerful computing systems that fuel AI algorithms.

The company’s recent earnings report highlights the significance of AI to its bottom line. Revenue from its AI products alone reached a record $3.1 billion during the second quarter.

Broadcom’s overall revenue rose 43 percent to $12.49 billion in its latest quarterly results, topping analysts’ expectations. The company also increased its full-year guidance for revenue for the current fiscal year to $51 billion, up from $50 billion.

Stock split to make Broadcom shares more affordable

Broadcom’s decision to split its stock 10-for-1 is a strategic move aimed at making the company more appealing to a broader range of investors.

Broadcom’s share price hovered around the $1,700 mark as of June 14, a recent all-time high and a hefty sum that might deter some new investors from buying in.

The stock is up more than 98 percent as of June 14 from a year prior.

While fractional share investing is common at many online brokers, a lower share price often generates excitement and can put ownership within reach for many small retail investors. By dividing each existing share into ten, the post-split price becomes significantly more affordable.

A stock split can also boost liquidity since more shares can lead to more frequent trading.

While a lower share price can make a stock cheaper, the total investment to own the same proportional stake remains the same.

The timing of the Broadcom split is also noteworthy. It comes on the heels of a similar move by Nvidia, another leading chipmaker heavily involved in the AI space. Nvidia’s successful 10-for-1 split in June 2024 followed the stock’s meteoric rise.

Shareholders will receive their additional shares of Broadcom after the stock market closes on July 12. Shares will start trading on a post-split basis when the market opens on July 15.

Broadcom vs. Nvidia

The stock splits announced by Broadcom and Nvidia highlight the growing rivalry between these two chip giants. Both companies are vying for dominance in the AI hardware market.

Broadcom boasts a comprehensive portfolio of AI hardware, including processors, graphics processing units (GPUs) and networking chips. They’re known for their focus on efficiency and high performance, making them ideal for data center applications.

Nvidia, on the other hand, is known for its powerful GPUs, particularly its GeForce series targeting the gaming industry. These GPUs are increasingly being repurposed for AI tasks due to their ability to handle large datasets efficiently.

Broadcom stock: What’s next?

Experts predict continued exponential growth in the artificial intelligence field, with AI applications one day permeating many aspects of daily life. This presents a major financial opportunity for companies like Broadcom that are well-positioned to capitalize on demand.

Broadcom’s recent financial performance and strategic decisions — including the stock split — are indicators of the company’s growth.

For investors seeking exposure to the AI boom, Broadcom’s post-split stock represents a potential buying opportunity. The company’s strong fundamentals, combined with its leadership in the AI hardware market, make it an attractive option for those looking to invest in the technology.

However, as with any stock, It’s important to conduct your own research and due diligence before making any investment decisions.

Editorial Disclaimer: All investors are advised to conduct their own independent research into investment strategies before making an investment decision. In addition, investors are advised that past investment product performance is no guarantee of future price appreciation.