Shares of semiconductor giant Broadcom (NASDAQ: AVGO) have witnessed an impressive surge of 96% over the past year, driven by growing demand for its artificial intelligence (AI) chips. Following the release of its fiscal 2024 second-quarter results, which exceeded consensus estimates, Broadcom has announced a 10-for-1 forward stock split, scheduled to take effect on July 15. This move aims to make ownership of Broadcom stock more accessible to investors and employees.

Broadcom's second-quarter revenue surged 43% year over year to $12.5 billion, surpassing the $12.06 billion consensus estimate. Adjusted earnings per share of $10.96 also exceeded Wall Street's expectation of $10.85 per share. The company reported a 12% year-over-year increase in organic revenue, excluding the VMware acquisition completed in November 2023.

The strong growth in Broadcom's AI business played a significant role in the company's stellar results. Revenue from sales of AI chips soared an impressive 280% year over year to $3.1 billion. As a result, Broadcom has raised its full-year revenue guidance to $51 billion, higher than the prior forecast of $50 billion. Furthermore, the company now expects its AI revenue for fiscal 2024 to reach $11 billion, up from the earlier estimate of $10 billion.

The demand for Broadcom's Ethernet networking switches has risen, thanks to their ability to facilitate fast data transfer in AI data centers. Additionally, the company has seen an increased deployment of its custom AI chips in data centers by hyperscale customers, securing more business. CEO Hock Tan noted in the latest earnings conference call that Broadcom has been awarded the next-generation custom AI accelerators for these customers, suggesting the potential for further growth in AI revenue.

The market for Ethernet switches is predicted to grow at an impressive annual rate of 20% in 2023, driven by the rise of AI. Furthermore, the global AI data center switch market is expected to achieve a compound annual growth rate of 38% through 2029, generating $20 billion in annual revenue by the end of the forecast period. The escalating demand for custom AI accelerators adds to Broadcom's market opportunities and positions it for long-term growth.

Despite the upcoming stock split, which will reduce the share price while increasing the number of outstanding shares, investors should consider Broadcom's valuation before making investment decisions. Currently, the company carries a trailing price-to-earnings (P/E) ratio of 64, which appears expensive compared to the Nasdaq-100 index's earnings multiple of 31. However, the forward P/E of 31 suggests positive growth potential and demonstrates that the stock is reasonably priced on a forward basis.

Considering the robust growth of Broadcom's AI business, along with the potential boost from the stock split announcement, the company remains a top semiconductor stock with solid prospects.

Disclaimer: Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool recommends Broadcom. The Motley Fool has a disclosure policy.