04:19 PM EDT, 06/06/2024 (MT Newswires) -- Broadcom's ( AVGO ) latest quarterly results and guidance could at least match expectations driven by its "burgeoning" artificial intelligence franchise, Oppenheimer said in a note e-mailed Thursday.

The chipmaker is scheduled to report its fiscal second-quarter results June 12. Oppenheimer projects earnings at $11.07 a share on sales of $12.26 billion. The results would mark an increase from the $10.32 and $8.73 billion reported a year earlier, respectively. The brokerage said the quarterly results and outlook for the current three-month period could be in line or better than forecasts.

The semiconductor segment's sales likely grew 5% year over year, with networking jumping 18%, led by custom compute AI application-specific integrated circuit, as well as the Tomahawk and Jericho switches and routers, Oppenheimer said. Broadcom ( AVGO ) owns the largest custom compute merchant franchise, aided by its relationship with Alphabet's (GOOG, GOOGL) Google ( GOOG ), according to the note.

Order velocity is picking up at Google ( GOOG ) and likely Facebook parent Meta Platforms ( META ) , Oppenheimer analysts Rick Schafer, Wei Mok and Dustin Fowler said. Within semiconductor, second-quarter wireless sales are projected to fall 16% sequentially, with a rebound likely in the second half of the year amid expectations for an Apple ( AAPL ) iPhone family refresh. The brokerage said it sees wireless as a "cash-cow" business for Broadcom ( AVGO ).

Software segment sales are seen jumping 166% on an annual basis in the second quarter, the first full quarter reflecting the company's acquisition of VMWare, according to the note. "Integrating and streaming (VMWare) offers 'self-help' upside optionality" to the company, the analysts said. Oppenheimer expects the segment to grow by a double-digit percentage sequentially through 2024.

The brokerage sees Broadcom's ( AVGO ) AI revenue topping $10 billion this year. It expects TikTok to be a custom compute customer, launching in the second half of the year, with ramp likely in 2025. Oppenheimer sees non-AI semiconductor business "troughing," potentially removing drag on the second half of the year.

The analysts said data-center AI networking and custom compute ASIC portfolio support the company's "snowballing" AI growth, while software drives its predictable growth and free cash flow. More than 20 core franchises across networking, wireless, broadband, server/storage and software support the company's "steady sustainable growth" and cash return, according to the note.

Oppenheimer left its 2024 and 2025 EPS outlooks unchanged at $49.28 and $55.96, respectively. The firm reiterated its outperform rating and $1,500 price target on the Broadcom ( AVGO ) stock, saying it continues to be a "long-term" buyer.

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