Semiconductor giant Broadcom (AVGO) has reported strong second-quarter results for fiscal year 2024, surpassing estimates and raising its full-year guidance. The company's revenue for the quarter reached $12.5 billion, a 43% YoY increase, while adjusted earnings per share came in at $10.96, beating Wall Street expectations.

The impressive performance can be attributed to Broadcom's booming sales of artificial intelligence (AI) chips. Revenue from AI chip sales soared by a staggering 280% YoY to $3.1 billion, driving the company's decision to increase its full-year revenue guidance to $51 billion, up from the previous forecast of $50 billion.

Broadcom's success in the AI chip market is twofold. Firstly, the demand for its Ethernet networking switches has significantly improved, facilitating speedy data transfers in AI data centers. Secondly, the company has seen a surge in the deployment of its custom AI chips by hyperscale customers in data centers. The industry-wide growth trend in these areas is expected to fuel further revenue increases for Broadcom's AI business throughout fiscal year 2024 and beyond.

As part of its strategy to make its stock more accessible to investors and employees, Broadcom announced a 10-for-1 forward stock split, set to take effect on July 15. This cosmetic move will increase the number of outstanding shares while reducing the share price, without impacting the company's fundamentals or market capitalization.

Broadcom's stock has experienced significant gains, with a surge of 96% in the past year, primarily driven by the growing demand for its AI chips. The stock split announcement has further excited investors, resulting in a 12% stock price increase since its unveiling.

While the stock split makes Broadcom shares more affordable to smaller investors, it is crucial to consider the company's valuation. Currently, Broadcom holds a trailing price-to-earnings (P/E) ratio of 64, which is considered expensive compared to the Nasdaq-100 index's P/E ratio of 31, indicating overvaluation. However, the forward P/E ratio of 31 suggests potential earnings growth and indicates a more reasonable valuation.

Broadcom's strong performance in the AI chip market, coupled with the stock split announcement, positions it as an appealing investment opportunity. The company's solid prospects indicate continued growth in the long run, making it an attractive AI stock to consider.

Investors interested in Broadcom are advised to conduct thorough research and assess the stock's current valuation before making investment decisions.

Disclaimer: The author of this article holds no position in any of the stocks mentioned. The Motley Fool recommends Broadcom. The Motley Fool has a disclosure policy.