Investors got exactly the news they wanted on Friday. The economy appears to be doing well, withstanding the pressure of higher interest rates without causing a big disruption in the labor market thus far. Major market benchmarks climbed sharply at midday, with the Dow Jones Industrials leading the way with a gain of nearly 2%.
Many sectors contributed to the rise on Wall Street, but the tech sector remained important. Indeed, with investors scouring the sector to find the best potential artificial intelligence (AI) stocks for the future, the latest financial results from Broadcom (AVGO 3.25%) had the spotlight as the week drew to a close. However, a much smaller stock had much better performance, as Samsara (IOT -0.64%) jumped out with an outsize gain. Below, you'll learn more about both companies and what they said.
Broadcom makes gains
Shares of Broadcom were up more than 2% on Friday afternoon. That might seem like a tiny move in comparison to what some other stocks in the semiconductor chip industry have seen lately, but when you consider the stock was down 6% or more in after-hours trading late Thursday, the rebound is noteworthy.
Broadcom's fiscal second-quarter financial results for the period ended April 30 showed resilience even in the face of industry challenges. Revenue of $8.73 billion was up 8% year over year, and adjusted net income rose 12% to $4.49 billion. That worked out to earnings of $10.32 per share on an adjusted basis, and Broadcom also saw solid gains in free cash flow.
CEO Hock Tan connected Broadcom's future to artificial intelligence, noting that the company sees plenty of potential to support customers that are looking to establish large-scale AI-based networks. Enterprise and service provider clients are likely to provide stable growth, but it's the hyperscale customers that could really drive Broadcom's expansion in the years to come.
What might have held Broadcom back somewhat, though, was fiscal third-quarter guidance that didn't suggest the big jump that rival Nvidia seems to be seeing. Nevertheless, Broadcom expects sales for the coming quarter to be around $8.85 billion, and that shows that the chipmaker sees itself holding up well even as many have worried about a possible pullback in IT spending.
Samsara surges higher
Elsewhere, shares of Samsara jumped 30%. The connected operations cloud provider reported fiscal first-quarter financial results for the period ended April 29 that featured high levels of growth and strong momentum for the future.
Samsara saw revenue jump 43% year over year to $204 million, with annual recurring revenue rising 41% to $856 million. Samsara ended the period with 1,375 customers spending more than $100,000 annually on its platform, up by more than half from 12 months ago. Losses narrowed from year-ago levels to just $0.02 per share, and adjusted free cash flow came close to breaking even as well.
Co-founder/CEO Sanjit Biswas was optimistic about the current industry environment. Even with customers pulling back on their overall levels of spending on technological innovations, they're prioritizing the projects that will help them reduce their expenses and boost return on investment. Samsara sees its software playing a key role for boosting productivity, and in Biswas' view, that should keep the company performing well.
As AI initiatives move forward, data from the Internet of Things (IoT) will become more important than ever. Samsara's products allow businesses to harness that IoT data, and that's a big part of why the company expects 33% to 34% sales growth this year and more to come.
