Chavi Mehta, Jane Lanhee Lee

(Reuters) – Broadcom, a chip company (NASDAQ:) Inc. on Thursday predicted second quarter revenues that exceeded Wall Street estimates due to strong demand from cloud and enterprise clients as well as the rapid growth in 5G technology.

Broadcom’s chief executives, Hock Tan and Hock, said that “enterprise spending” is on fire. According to Hock Tan, the sector is now recovering from the “trough” of the first quarter last year.

Broadcom’s current quarter revenue was estimated at $7.9 Billion, as compared to analysts’ average of $7.43 Billion, IBES data from Refinitiv shows.

The shares of the San Jose-based company increased by about 2% during extended trading. They have fallen about 12% this year due to a slump in tech stocks.

Kirsten Sparrow, chief financial officer at Broadcom, stated to analysts that hardware orders had increased by over $25 Billion in quarter three, as compared to the $22 Billion order backlog.

Logan Purk of Edward Jones analyst, said: “This shows a picture for continuing strong demand to continue through the year.”

Broadcom (NASDAQ:), which has Apple Inc. as its major customer, stands to benefit from 5G’s global rollout. This will likely increase demand for the chips it uses in smartphones and telecom equipment.

Kinngai Chan from Summit Insights Group, an analyst said that “we think most Broadcom’s end markets and major customers demand will remain healthy in the short term.”

However, our checks do show double-ordering by customers. We expect that demand will begin to normalize around 2H22, as the supply increases.

The adjusted revenue for the quarter ended January 30th was $7.71 Billion, an increase of 16% over last year and slightly more than Wall Street expected at $7.60 Billion.

The company’s earnings were $8.39 per share after excluding these items. This beat estimates of $8.08.