Broadcom Surges Towards $1 Trillion Valuation on AI Chip Demand

Meet the Newest Artificial Intelligence (AI) Chip Stock to Join Nvidia in the $1 Trillion Club | The Motley Fool

Nvidia flew past the $1 trillion milestone in May 2023. It's more than tripled since that point, becoming one of just three companies with a market capitalization above $3 trillion. But Nvidia isn't the only company that's seen its market capitalization soar as AI spending booms. In fact, AI advancements are virtually inseparable from the success of nearly every company valued at over a trillion dollars. The newest member, which both complements and competes with Nvidia, is no different. The newest artificial intelligence chip stock in the $1 trillion club is Broadcom (AVGO 24.43%). The stock passed the milestone after a stellar fourth-quarter earnings report on Dec. 12. Here's how the company became a leading AI chipmaker worth 13 figures. Broadcom is a well-diversified business. It has an enterprise software segment, led by VMWare and Symantec. It also makes semiconductors for applications, including wireless phones, WiFi, and Bluetooth. But what's really driving the business are two specialized semiconductor applications: Its networking chips, and its AI accelerators. Broadcom's networking chips are essential infrastructure for AI data centers. While hyperscalers are paying billions for Nvidia's GPUs, they need Broadcom's chips to get the most out of their processing power. Broadcom's Tomahawk and Jericho switches ensure that data moves quickly and efficiently from one server to another. That means there's less redundancy and downtime in processing. And when you're trying to make the most out of billions of dollars' worth of chips, every second counts. There's no company that's even close to Broadcom's technology when it comes to developing these chips. Moreover, there's nobody in charge of a hyperscale data center who's going to risk their job by switching to a competitor's offering, no matter how much money it could save the business. So, as data centers grow the number of expensive GPUs and other chips in their server racks, Broadcom's business has grown exponentially. Even more promising is its custom AI accelerator business. These are the next generation of AI chips. Broadcom works with several companies to develop purpose-built AI chips for their data centers. Its three biggest customers are Alphabet, Meta Platforms, and TikTok parent ByteDance. Management estimates that these three companies will present an addressable market of between $60 billion and $90 billion by 2027. Considering all three companies' potential gains from advancements in AI, the high end of that number seems more likely than the low end. Management also announced that it signed deals with two new customers building their own next-generation chips. Broadcom won't disclose the details, but many believe those customers to be Apple and OpenAI. Apple is familiar with Broadcom's work. It used Google's TPUs to train Apple Intelligence. Apple's big push to incorporate AI into its devices at a system level could lead it to become Broadcom's biggest customer in short order. That leaves tremendous upside in management's addressable market outlook, which doesn't include the new customers. Indeed, with its networking chips and AI accelerators, Broadcom looks well-positioned to benefit from the maturing development of artificial intelligence. Going forward, management plans to split its semiconductor reporting into AI and non-AI segments. The growth of the former will drive results for the entire business for the foreseeable future. Despite shares soaring more than 24% after the company reported its fourth-quarter earnings, the outlook for the business remains strong enough to justify its current price. Management's $60 billion to $90 billion addressable market outlook represents a compound annual growth rate for the AI semiconductor segment of greater than 60%. And with the upside of two potential new customers, the growth could be significantly higher by 2027. While AI semiconductors remain a small part of Broadcom's business today, they're the driving force behind its future. Even after tripling AI sales in 2024, management still expects AI chips to account for roughly one-quarter of the company's total revenue in the first quarter of 2025. But as AI chips become a bigger part of Broadcom's business and continue to grow at a rapid pace, the company's earnings growth should remain strong for a very long time. Analysts currently expect 28% earnings growth next year and 20% growth in 2026. As a result, investors should be willing to pay a premium valuation today for a stock that's already growing earnings at a strong pace. Shares trade for about 36 times forward earnings as of this writing. That's definitely a premium price, and investors should consider the risks of investing at this price. Specifically, AI spending may not continue at the rampant pace it's seen in the last two years. But the stock traded at a similar valuation earlier in 2024, and management just showed why it was worth the price then. Investors looking for an alternative to Nvidia may want to consider Broadcom for their portfolios.

Broadcom Stock Soars on Explosive 3-Year Artificial Intelligence (AI) Revenue Growth Projection | The Motley Fool

In fiscal Q4, the chipmaker continued to experience powerful demand for its products for AI data centers, including custom AI chips and Ethernet networking products. Shares of Broadcom (AVGO -1.39%) gained 14.1% in Thursday's after-hours trading, following the semiconductor and infrastructure software maker's release of its report for the fourth quarter of fiscal 2024 (ended Nov. 3). The stock's big rise is largely attributable to very bullish comments that CEO Hock Tan made on the earnings call about the company's artificial intelligence (AI) revenue growth opportunity over the next three years. Indeed, before the call started at 5 p.m. ET, shares had only been up a modest 2.2% in after-hours trading following the earnings release, but rocketed during Tan's opening remarks. More minor contributors to the stock's increase were fiscal Q4 2024 earnings beating Wall Street's expectation and fiscal Q1 2025 revenue guidance slightly surpassing the analyst consensus estimate. As for fiscal Q4 revenue, it was in line with the Street's expectation. Data source: Broadcom. *Calculations by author, except for revenue growth, which the company provided in the earnings release. YOY = year over year. GAAP = generally accepted accounting principles. Fiscal Q4 2024 ended Nov. 3. Broadcom's organic growth in the quarter was 11% year over year, Tan said on the earnings call. Organic revenue excluded the contribution from VMware, the large software maker the company acquired in November 2024. Investors should focus mainly on the adjusted numbers for operating and net income, which exclude one-time items. Wall Street was looking for adjusted EPS of $1.39 on revenue of $14.06 billion, so Broadcom exceeded the profit expectation and essentially met the top-line one. It surpassed its own revenue guidance, which was $14 billion. It also topped its adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) outlook of 64% of revenue, as this profitability metric landed at 65%. The company does not provide earnings guidance. In the quarter, Broadcom generated cash of $5.6 billion running its operations, up 16% from the year-ago period. It generated free cash flow (FCF) of $5.48 billion, or 39% of revenue, up 16% year over year. The company ended the quarter with cash and cash equivalents of $9.35 billion, down 6% from the prior quarter, and long-term debt of $66.3 billion. Data source: Broadcom. Calculations by author. YOY = year over year. The infrastructure software segment's revenue growth was driven by the VMware acquisition. The semiconductor segment's revenue growth was driven by strong AI product growth notably offset by continued weakness in non-AI products. On the earnings call, Tan said the semiconductor segment's AI revenue grew 150% year over year to $3.7 billion, while non-AI revenue declined 23% year over year to $4.5 billion. AI products include custom AI chips -- which are application-specific integrated circuits (ASICs) -- for hyperscalers (large tech companies that operate huge cloud data centers) and Ethernet networking products for AI data centers. The good news on the non-AI side is that this revenue has recovered 10% from the bottom six months ago. Broadcom announced that it's increasing its quarterly stock dividend by 11% to $0.59 per share for fiscal year 2025. This is the "fourteenth consecutive increase in annual dividends since we initiated dividends in fiscal 2011," CFO Kirsten Spears said in the earnings release. Broadcom's dividend was yielding 1.18% at the stock's price at the close of Thursday's regular trading session. For the fiscal first quarter of 2025 (which ends Feb. 2), management expects: Going into the report, Wall Street had been modeling for Q1 revenue of $14.55 billion, so the company's revenue outlook was slightly higher than this expectation. On the earnings call, Tan projected that in fiscal 2027, the company's total AI revenue will be at least $60 billion to $90 billion. This is a conservative estimate as it only includes revenue the company foresees from its existing three big hyperscaler customers. In fiscal 2024, Broadcom's AI revenue was $12.2 billion. So, the CEO's projection equates to an AI product revenue compound annual growth rate (CAGR) of at least 70% to 95%. One big reason Broadcom's fiscal 2027 AI revenue has a good chance of exceeding the $60 billion to $90 billion projection is that the company just added two additional hyperscaler customers. Thus, it will likely generate some AI revenue from these new customers by fiscal 2027.

What Broadcom's Quarterly Results Signal for AI Growth | Investing.com UK

Since the Broadcom (NASDAQ:AVGO) coverage mid-June, AVGO shares are up 27%. At that time, just ahead of the stock's 10-for-1 split, we posited that Broadcom's dual business model (data center/cybersecurity) is yet to yield significant gains for shareholders. Most recently on Thursday, Broadcom pleasantly surprised AVGO shareholders. Not only did Broadcom beat the earnings per share (EPS) forecast at $1.25 reported vs $1.13 estimated, but the company reported 220% year-on-year AI revenue growth. Over the week, AVGO stock has been up 20%, up to the current price of $215.23 per share at the time of writing. But is this the right time to get Broadcom stock exposure? After acquiring VMware for an enormous $69 billion, completed in November 2023, Broadcom made a significant pivot. Operating in the same cloud-based cybersecurity niche as Crowdstrike (NASDAQ:CRWD), VMware added Infrastructure as a service (IaaS) to Broadcom's business model. This move is quite similar to Tesla (NASDAQ:TSLA) attempting to materialize Full Self-Driving (FSD) for the emerging robotaxi-based ride-hailing market. In the case of Broadcom, the company gained a recurring revenue model on top of the cyclical hardware infrastructure offering. VMware's multi-cloud management and virtualization perfectly complement Broadcom's existing networking, storage, and semiconductor solutions. In other words, Broadcom aimed for the full stack regarding data center infrastructure, covering both software and hardware. As of the latest Q4 2024 earnings report, the lean infrastructure software division continues to outperform. While Broadcom's semiconductor solutions division generated $8.23 billion in revenue, a 12% yoy growth, the infrastructure software segment achieved $5.82 billion in revenue, a 196% growth. Broadcom increased its annual revenue by 51% to $14.05 billion. This elevated the company's net income (GAAP) by 23% yoy, to $4.32 billion. AVGO investors can also look forward to stock buybacks and dividend payouts. These expenditures come from Broadcom's free cash flow (FCF), which increased by 16% yoy to $5.48 billion, or 39% of revenue. Ending the fiscal year 2024, Broadcom spent $5.2 billion on the stock buyback program while returning $7.17 billion to shareholders via dividend payments. Currently, AVGO shares have a 1.17% dividend yield at a $2.12 annual payout per share. At the same time, Broadcom has a forward price-to-earnings (P/E) ratio of 29.24. For comparison, Meta Platforms (NASDAQ:META) has a 0.32% dividend yield at $2 per share annual payout, giving investors forward P/E ratio of 24.88. For fiscal year 2025, Broadcom increased its dividend by 11%, to $2.36 per share (annually). This marks Broadcom's 14th consecutive annual dividend increase. Reminder: dividend aristocrat companies need to raise their dividends for at least 25 consecutive years to gain that moniker. Given the relatively high P/E ratio, it is clear that investors expect more from Broadcom's AI-driven revenue. Out of the company's total $51.6 billion revenue for FY24, the expanding AI infrastructure market contributed $12.2 billion, having grown 220% year-on-year. Broadcom accomplished this thanks to its next-gen custom accelerators (XPUs) for AI. Namely, the 3.5D XDSiP greatly reduces component latency (between memory, CPU, I/O) and signal bandwidth by using a 3D - 2.5D chip stacking approach. This manufacturing technique makes AI computing platforms cheaper, more energy efficient, and more compact. Considering that AI hyperscalers like Microsoft (NASDAQ:MSFT) and Alphabet (NASDAQ:GOOGL) need nuclear power to scale their data center operations, Broadcom is expected to contribute with its computing optimization prowess. For Q1 2025, the company projects revenue guidance to $14.6 billion, 22% higher than the year-ago quarter. AI products remain in uncharted territory. While OpenAI's ChatGPT impressed with text-to-text generation, and Anthropic's Claude did the same for coding and AI agents, they still must demonstrate more consistent reliability. Further, it is likely that text-to-video generation will be the real milestone game-changer. Not only are humans visually focused, but drastically higher computing demands would overwhelm current AI infrastructure. After all, high-res video generation requires up to 100 more computing power per second compared to text-to-text. In turn, demand for Broadcom's AI compute optimization would soar. At the same time, this demand could prove vital to offset the AI model training ceiling regarding text-to-text. Recently, Nature magazine projected that text data for AI models could hit a limit by 2028. The workaround for this issue is largely focused on accessing non-public data and simulations to generate new data. MarketsandMarkets forecasts global AI market size to increase from $214.6 billion in 2024 to $1.3 trillion in 2030, giving AI investors an approximate Compound Annual Growth Rate (CAGR) of 35.7%. Over the last two years, Nvidia (NASDAQ: NASDAQ:NVDA) took the public spotlight, gaining first-mover advantage in the AI data center sector just as Bitcoin achieved in the world of cryptocurrencies. This translates to somewhat diluted interest for other companies, including Broadcom. Against the 52-week average of $147.23, AVGO stock is now priced at $215.23 per share. This price level is aligned with WSJ's median price target of $216.51. The high expectation is $260 while the bottom AVGO price forecast is $160 per share. The bottom line is a stock market correction should be expected. Last week, BlackRock's CEO Larry Fink sold $50.4 million BLK shares, the highest insider sale in the asset manager's history. Given that Fink has access to Aladdin Analytics' inner workings, it is fair to say this is a signal that should not be ignored. If such a market correction occurs, investors should revisit AVGO stock as one of the top AI data center/cybersecurity companies with strong fundamentals. ***

Broadcom rallies on forecast for booming AI chip demand

Dec 13 (Reuters) - Shares of Broadcom (AVGO.O), opens new tab soared 14% on Friday, with the chipmaker moving closer to $1 trillion in market value after it forecast that demand for its custom AI chips would keep rising in the coming years. The company was on track to add around $120 billion to its market value of $843 billion, based on premarket share movements, as it also forecast revenue for the first quarter above Wall Street estimates on Thursday. Rival Marvell Technology's (MRVL.O), opens new tab shares gained 5.3%. Broadcom has become a go-to supplier for big technology companies looking to reduce their dependence on pricey, supply-constrained AI processors made by front-runner Nvidia (NVDA.O), opens new tab by developing their own advanced custom chips. That has pushed Broadcom's shares up more than 62% so far this year. CEO Hock Tan said on Thursday he expected the AI market to present a revenue opportunity between $60 billion and $90 billion for fiscal 2027, adding that Broadcom had won two major hyperscaler customers, which refers to large cloud firms. The company said it captured more than $12 billion of the total serviceable AI revenue of between $15 billion and $20 billion in fiscal 2024. This includes both its custom AI chips as well as the networking equipment used in data centers. "Extrapolating this ~70% market share to FY 2027 would imply AI revenue exceeding $50 billion," TD Cowen analysts estimated. The $60 billion to $90 billion revenue opportunity "is difficult to prove/disprove, but is huge", they added. At least 16 brokerages raised their price targets on Broadcom's shares, pushing the median view to $210, according to data compiled by LSEG. That represents an upside of 16% to the stock's last closing price. Broadcom's 12-month forward price-to-earnings ratio is 29.8, compared with Nvidia's 31.03 and Marvell's 41.14. "They went out of their way to give investors a reason to dream, painting a three-year picture with potential $60 billion to $90 billion AI revenue opportunity from current customers, and with more possible given two new potential customers currently engaged," Bernstein analyst Stacy Rasgon said. "The AI story seems to really be coming into its own, perhaps Hock might think about shopping for a leather jacket," Rasgon added, referring to Nvidia CEO Jensen Huang's signature style. Reporting by Siddarth S and Joel Jose in Bengaluru; Editing by Shounak Dasgupta Our Standards: The Thomson Reuters Trust Principles., opens new tab Suggested Topics:Technology

Meet the Stock-Split Stock That Soared 10,610% Over the Past 15 Years. It's Poised to Join Apple, Nvidia, Microsoft, Amazon, Alphabet, and Meta in the $1 Trillion Club by 2025. | The Motley Fool

The semiconductor and software provider continues to deliver brisk growth, with artificial intelligence (AI) representing one of its biggest opportunities. Recent advances in the field of artificial intelligence (AI) help illustrate that technology has come to dominate over the past two decades, with tech issues leading the list of the world's most valuable companies. That wasn't always the case. Just 20 years ago, General Electric and ExxonMobile were the leaders in terms of market cap, valued at $319 billion and $283 billion, respectively. These days, technology rules the roost. Apple, Nvidia, and Microsoft are each worth more than $3 trillion and led the leaderboard at some point in 2024. Other big tech members of the $1 trillion club are also household names, including Amazon, Alphabet, and Meta Platforms, with valuations of between $1.5 trillion and $2.3 trillion. With a market cap of roughly $797 billion (as of this writing), Broadcom (AVGO 5.32%) seems a shoo-in for membership in this exclusive fraternity. The company supplies a broad cross-section of products that are critical components in data center infrastructure, where most AI processing takes place, and its indispensable technology could be the fuel that drives Broadcom's successful quest for membership. As well as being one of the world's foremost custom chipmakers, Broadcom also offers a host of complementary products and services in the mobile, cable, broadband, and data center segments. The company states that "99% of all internet traffic crosses through some type of Broadcom technology." This extensive reach illustrates why Broadcom's technology is a critical part of the generative AI ecosystem, as the technology lives primarily in the cloud and in data centers. Beyond AI, investors continue to underestimate the opportunity represented by Broadcom's purchase of VMWare late last year. During the recent earnings call, management noted that "VMWare bookings continue to accelerate," amounting to $2.5 billion in Q3, up 32% sequentially. Furthermore, the company continues to drive down VMWare spending. CEO Hock Tan noted that with the VMWare integration proceeding as expected, Broadcom was on track to deliver on its goal of $8.5 billion in adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) by 2025. Once the process is complete, the company expects to deliver expanding margins and increasing profits. The results highlight an intriguing opportunity. For its fiscal third quarter (ended Aug. 4), Broadcom delivered revenue of $13.1 billion, which jumped 47% year over year, while its adjusted earnings per share (EPS) increased 18% to $1.24. Management expects this upward trajectory to continue, increasing its full-year revenue forecast to $51.5 billion, representing growth of 44%. This adds to Broadcom's long history of strong business and financial performance, which has fueled its surging stock price. This, in turn, led the company to declare a 10-for-1 stock split earlier this year, which it completed in July. Broadcom's chips and ancillary products -- critical components in data center operations -- give the company an important role in supplying the AI ecosystem. Broadcom is in an enviable position, which will be a key driver in the next stage of its growth. Wall Street expects Broadcom to generate revenue of $51.7 billion in 2024, giving it a forward price-to-sales (P/S) ratio of roughly 15. If the stock's P/S remains constant, Broadcom will need to generate sales of roughly $65 billion annually to support a $1 trillion market cap. Analysts' consensus estimates are guiding for revenue growth of 44% in 2024 and 17% in 2025. If the company hits those targets, it will likely achieve a $1 trillion market cap as soon as mid-2026. That said, I believe Wall Street's growth estimates are conservative, as Broadcom has exceeded analysts' expectations in each of the past three quarters. Therefore, it isn't unreasonable to expect more of the same over the coming year. Accelerating AI spending and the growing adoption of VMWare should give Broadcom multiple paths for robust growth next year, which is why I believe 2025 is a more likely timeframe for the company to join the trillionaire club. Observations by management seem to support that, as Broadcom is experiencing "strong demand from hyperscalers for both AI networking and custom AI accelerators." Furthermore, commentary from the world's largest cloud infrastructure providers suggests demand won't be slowing for the foreseeable future. Estimates for the size of the AI market continue to climb, but even the more conservative estimates are compelling. According to Bloomberg Intelligence, generative AI is expected to be a $1.3 trillion market by 2032. McKinsey & Company places the economic impact at between $2.6 trillion and $4.4 trillion annually. While no one knows for sure just how big the AI opportunity will ultimately be, most experts agree it will be much higher than it is today. Despite Broadcom's impressive gains, it remains attractively priced, currently selling for just 27 times forward earnings, compared to a multiple of 30 for the S&P 500. That's not a bad price for a stock that's delivered total returns (including dividends) of 14,500% since 2009, especially when compared to a gain of just 633% for the broader market.

Broadcom stock climbs 13%: The AI boom investors can't ignore

Broadcom Inc. reported a record revenue of $51.6 billion for fiscal year 2024, driven by a 220% surge in AI revenue and a 51% increase in quarterly revenue. The company noted significant growth in both semiconductor and infrastructure software sectors, highlighting its position in the AI market. For Q4 2024, Broadcom's revenue reached $14.1 billion, marking a 51% increase year-over-year from $9.3 billion. The company reported an operating profit of $8.8 billion for the same quarter, which represents a 53% year-on-year growth. Net income for Q4 stood at $4.32 billion, equating to 90 cents per share, up from $3.52 billion or 83 cents per share in Q4 2023. In fiscal 2024, semiconductor revenue was $30.1 billion, of which $8.2 billion was generated in Q4, reflecting a 12% year-over-year increase. Infrastructure software revenue reached $5.8 billion in Q4, nearly tripling from the previous year when it generated $1.96 billion. The gross margin for Q4 was reported at 76.9%, which is an increase of 260 basis points compared to the same period last year. Free cash flow amounted to $5.5 billion, accounting for 39% of the total revenues. Broadcom's AI revenue reached $12.2 billion in fiscal 2024, a remarkable uptick from $3.8 billion in the previous fiscal year. This growth signifies a 220% year-on-year increase, representing 41% of the total semiconductor revenue. CEO Hock Tan emphasized the potential of custom AI chips currently in development for three large cloud customers, anticipating that these clients will deploy 1 million AI chips in networked clusters by 2027. The company estimates the market opportunity for AI chips and networking components could range between $60 billion and $90 billion by fiscal 2027. While the AI segment thrived, non-AI semiconductor revenue experienced a decline of 23% year-over-year. Broadcom's broadband revenue also faced challenges, dropping to $465 million in Q4, a 51% decrease compared to last year, indicating potential hurdles in maintaining revenue growth across all segments. How Apple's AI innovations pushed its stock to all-time highs For Q1 of fiscal 2025, Broadcom has provided guidance of approximately $14.6 billion in revenue, which marks a projected 22% increase from the same quarter last year. The semiconductor revenue is expected to reach about $8.1 billion, demonstrating an estimated 10% year-on-year growth, while infrastructure software revenue is forecast to be around $6.5 billion, up 41% year on year. The company anticipates an adjusted EBITDA margin of around 66% of revenue. Broadcom has returned a record $22 billion in cash to shareholders through dividends and share buybacks in fiscal 2024, representing a 45% increase year-on-year. The company announced an 11% increase in its quarterly dividend to 59 cents per share for fiscal 2025. Disclaimer: The content of this article is for informational purposes only and should not be construed as investment advice. We do not endorse any specific investment strategies or make recommendations regarding the purchase or sale of any securities.

Prediction: This Artificial Intelligence (AI) Chip Stock Is Going to Skyrocket After Dec. 12 | The Motley Fool

The company's terrific technological lead in the AI GPU space has given it a wide moat, and its rivals remain way behind it when it comes to selling AI GPUs. As a result, Nvidia's data center revenue rose by a remarkable 112% year over year in the third quarter of its fiscal 2025 to a record $30.8 billion, while AMD's revenue from this segment came in at just $3.5 billion in its most recently reported quarter. At the same time, some investors seem a tad concerned about the relative slowdown in Nvidia's growth. Though the company's total revenue increased an impressive 94% year over year in the previous quarter to $35.1 billion, that was slower than the 122% year-over-year increase Nvidia reported in the second quarter of its fiscal 2025. The market's outlook for the current quarter points toward a 70% year-over-year increase in revenue. Additionally, Nvidia is trading at an expensive valuation. That may lead investors to look for alternative ways to capitalize on the growth of the AI chip market. That's why now would be a good time to take a closer look at a company that has been touted as the next best bet after Nvidia on the booming AI chip market. This stock has already delivered impressive gains this year, and it seems poised to fly higher after the company releases its fiscal 2024 fourth-quarter results on Thursday. Broadcom (AVGO -0.33%) has been called the second-most-important AI chip company. It's the dominant player in application-specific integrated circuits (ASICs), a type of custom chip that's gaining prominence in AI because of its lower cost and power efficiency compared to the GPUs that Nvidia sells. More specifically, Broadcom controls an estimated 55% to 60% of the market for ASICs. According to a forecast by analysts at market research firm Lucitel, demand for AI-specific ASICs will grow at an annualized rate of 32% through the end of the decade. That bodes well for Broadcom. Moreover, JPMorgan analyst Harlan Sur believes that the cumulative revenue opportunity for Broadcom in the custom AI chip market stands at a staggering $150 billion. This helps explain why Broadcom management has been raising its AI-specific revenue guidance. The company expects to end this fiscal year with AI chip revenue of $12 billion, up from its earlier outlook of $11 billion. For comparison, generative AI accounted for 15% of Broadcom's fiscal 2023 semiconductor revenue of $28 billion -- just $4.2 billion. So, Broadcom's AI revenue is on track to nearly triple in just one year, and given its massive opportunity in the custom AI chip market, it is only at the beginning of a terrific growth curve in this space. Additional upbeat news on this front could send Broadcom stock soaring even further when it delivers its quarterly report on Thursday. The consensus estimate from analysts following the chipmaker is for $14.06 billion in revenue in fiscal Q4, which would be a 51% increase from the prior year. Importantly, that includes the revenue contribution from VMware, which it acquired in November 2023. That revenue projection is in line with Broadcom's estimate of $14 billion. However, as the company has increased its full-year revenue forecast, there is a solid chance that its top line will land ahead of Wall Street's expectations. Analysts are expecting its adjusted earnings to jump to $1.39 per share from $1.11 per share in the year-ago period, which would be a solid increase of 25%. However, given the increase in its AI revenue guidance, its bottom line should ideally be better than Wall Street's expectations. At the same time, Broadcom's dominant position in the fast-growing custom AI chip market should allow management to deliver robust guidance for its fiscal 2025, especially considering that it is looking to push the technological envelope in this space. Management recently pointed out that Broadcom has developed new tech to speed up its custom AI chips and pack more memory into them using the advanced chip packaging technology of its foundry partner, TSMC. Broadcom trades at around 29 times forward earnings right now, almost in line with the average multiple of the tech-laden Nasdaq-100 index. That's an attractive valuation for this semiconductor stock. Investors should consider grabbing this opportunity soon, since the stock is likely to fly higher after its quarterly report.

Broadcom rallies on forecast for booming AI chip demand

(Reuters) - Shares of Broadcom soared 14% on Friday, with the chipmaker moving closer to $1 trillion in market value after it forecast that demand for its custom AI chips would keep rising in the coming years. The company was on track to add around $120 billion to its market value of $843 billion, based on premarket share movements, as it also forecast revenue for the first quarter above Wall Street estimates on Thursday. Rival Marvell Technology's shares gained 5.3%. Broadcom has become a go-to supplier for big technology companies looking to reduce their dependence on pricey, supply-constrained AI processors made by front-runner Nvidia by developing their own advanced custom chips. That has pushed Broadcom's shares up more than 62% so far this year. CEO Hock Tan said on Thursday he expected the AI market to present a revenue opportunity between $60 billion and $90 billion for fiscal 2027, adding that Broadcom had won two major hyperscaler customers, which refers to large cloud firms. The company said it captured more than $12 billion of the total serviceable AI revenue of between $15 billion and $20 billion in fiscal 2024. This includes both its custom AI chips as well as the networking equipment used in data centers. "Extrapolating this ~70% market share to FY 2027 would imply AI revenue exceeding $50 billion," TD Cowen analysts estimated. The $60 billion to $90 billion revenue opportunity "is difficult to prove/disprove, but is huge", they added. At least 16 brokerages raised their price targets on Broadcom's shares, pushing the median view to $210, according to data compiled by LSEG. That represents an upside of 16% to the stock's last closing price. Broadcom's 12-month forward price-to-earnings ratio is 29.8, compared with Nvidia's 31.03 and Marvell's 41.14. "They went out of their way to give investors a reason to dream, painting a three-year picture with potential $60 billion to $90 billion AI revenue opportunity from current customers, and with more possible given two new potential customers currently engaged," Bernstein analyst Stacy Rasgon said. "The AI story seems to really be coming into its own, perhaps Hock might think about shopping for a leather jacket," Rasgon added, referring to Nvidia CEO Jensen Huang's signature style. (Reporting by Siddarth S and Joel Jose in Bengaluru; Editing by Shounak Dasgupta)

Broadcom Joins $1 Trillion Market Cap Club as Stock Soars on AI Demand

The stock has nearly doubled this year as tech companies have rushed to develop and deploy custom AI infrastructure. Shares of Broadcom (AVGO) soared on Friday, launching the chipmaker into the small club of public companies worth more than $1 trillion. Broadcom shares were up more than 20% at about $220 in early trading Friday, putting the company's market capitalization at just over $1 trillion. Broadcom is just the ninth U.S. company to reach the milestone, and is the second semiconductor company to do so. Nvidia (NVDA) became the first when it hit $1 trillion last year, and its market cap has since surpassed $3 trillion. With Friday's jump, Broadcom stock has nearly doubled in value this year. The advanced chip maker has seen its sales and profit soar as tech companies have rushed to develop and deploy custom AI infrastructure. The company on Thursday reported revenue from artificial intelligence more than tripled this fiscal year to $12.2 billion. Chief executive Hock Tan said he sees a "massive" opportunity in AI for Broadcom. The company, he said, is already working with three tech giants on custom AI infrastructure, and could see that revenue stream grow to between $60 billion and $90 billion a year by 2027. With approximately 4.67 billion shares outstanding, Broadcom stock would need to close above $214.11 to keep its $1 trillion market cap.

Broadcom Stock Soars as Analysts Grow More Bullish on Chipmaker's AI Potential

The chipmaker's artificial intelligence (AI) pipeline "remains strong," Citi analysts said Friday, after Broadcom announced a pair of new AI customers on its earnings call. Broadcom didn't name the customers, according to a transcript of the call from AlphaSense, but Citi speculated they could be Apple (AAPL) and ChatGPT-maker OpenAI. Apple is reportedly working with Broadcom to develop its own AI chips, according to reporting by The Information. Citi reiterated a "buy" rating for the stock and raised its price target to $220 from $205. Shares of Broadcom jumped nearly 20% to $215.92 in early trading Friday, pushing its market capitalization above the $1 trillion level. Broadcom reported its AI sales more than tripled to $12.2 billion in fiscal 2024, and Bank of America analysts suggested they could reach $30 billion by the end of the 2027 calendar year. The bank maintained its "buy" rating and lifted its price target to $250 from $215. Mizuho analysts were even more bullish on Broadcom's AI revenue growth, projecting more than $50 billion in AI revenue in fiscal 2027. The firm lifted its price target to $245 from $220 and reiterated an "outperform" rating.

This Artificial Intelligence (AI) Stock-Split Stock Has Surged in 2024. But Is Broadcom Stock a Buy for 2025? | The Motley Fool

Broadcom stock's performance over the last decade is just as impressive. It's returned 2,140% through Dec. 6, turning a $1,000 investment into $22,400. The broader market returned 252% over the last 10 years. Broadcom's past performance is great for folks who have owned the stock for some time. But is Broadcom stock worth buying now as 2025 approaches? Data sources: Yahoo! Finance and finviz.com. P/E = price-to-earnings ratio. Data to Dec. 6, 2024. Broadcom has a quite involved corporate history. The main thing investors should know is that the company has largely employed a growth-by-acquisitions strategy, which has continued through to recently. In late 2023, Broadcom acquired VMWare, which was a large software company focused on virtualization and cloud services. Broadcom designs and sells semiconductors, or "chips," and infrastructure software. The VMWare acquisition gave a big boost to Broadcom's software business. In the fiscal third quarter, which ended on Aug. 4, Broadcom's chip segment accounted for 56% of its total revenue and its infrastructure software segment brought in the other 44%. Broadcom is a growing player in artificial intelligence (AI). Its AI-related products include custom AI chips and Ethernet networking products used in data centers that process AI workloads. Broadcom is the leader in making application-specific integrated circuits (ASICs) for large tech companies that speed up the processing of AI workloads. These are custom AI chips, as opposed to AI chip leader Nvidia's graphics processing units (GPUs), which are not custom designed, but have wider applications. Broadcom's custom AI chip customers are known to include Google parent Alphabet and Facebook parent Meta Platforms. Broadcom did not explicitly state how much total revenue it generated from AI-related products in fiscal Q3. But based on comments from CEO Hock Tan on the earnings call, we can deduce that AI-related revenue was about $3.1 billion to $3.2 billion. That was about 24% of total revenue. Focusing on Broadcom's most recent quarterly results, rather than those over a longer period, will give investors a clearer picture of its business due to its acquisition of VMWare. This acquisition, which closed in November 2023, was a big one and has significantly affected Broadcom's business profile and performance. In its third quarter of fiscal 2024, ended Aug. 4, Broadcom's revenue grew 47% year over year to $13.1 billion. This growth was primarily driven by its acquisition of VMware. Excluding the contribution from this acquisition, revenue grew 4% year over year. By segment, semiconductor solutions' revenue grew 5% to $7.3 billion and infrastructure software's revenue soared 200% to $5.8 billion. The chip segment's modest overall revenue growth of 5% year over year was due to weakness in the company's non-AI chip markets. These include non-AI networking, server storage connectivity, wireless, broadband, and industrial. This weakness is an industrywide phenomenon. The good news is that at least some of these markets appear to have bottomed as their revenue increased on a sequential quarter basis. The chip segment's overall revenue growth obscures how fantastic the company's AI chip business is performing. Revenue from sales of custom AI chips increased three and a half times year over year, CEO Tan said on the earnings call. As for the bottom line, net income according to generally accepted accounting principles (GAAP) was negative because of a "one-time discrete non-cash tax provision ... related to a supply chain realignment," and acquisition-related costs. Adjusted for one-time items, net income rose 33% to $6.12 billion, which translated to earnings per share (EPS) increasing 18% to $1.24. Broadcom's business is very profitable. The company's adjusted profit margin (adjusted net income divided by revenue) for the quarter was about 47%. For comparison, Marvell Technology, which is the other big player in making custom AI chips for big tech companies, had an adjusted profit margin of about 25% in its fiscal third quarter, reported last week. Investors will have more relevant data soon, likely including guidance for fiscal 2025. Broadcom is slated to report its results for the fourth quarter of fiscal 2024, ended Nov. 3, after the market close on Thursday, Dec. 12. Management has guided for Q4 revenue of $14 billion, which would equate to growth of 51% year over year. Wall Street is expecting adjusted earnings per share (EPS) to jump 26% year over year to $1.39 and revenue to surge 52% to $14.1 billion. Broadcom's stock valuation is relatively reasonable. As of Friday's close, the stock was trading at 29.1 times the company's projected (by Wall Street) forward earnings. This is reasonable for a stock of a company: Bullet-point No. 2 means the stock's valuation based on its price-to-FCF ratio has usually been lower than its valuation based on its price-to-earnings (P/E) ratio. And over a longer period, a company's FCF is a better indicator of its performance than are its earnings, which is just an accounting measure. Broadcom's infrastructure software segment and its AI chip business have significant growth potential. And its stock valuation is reasonable. It seems worth buying. That said, investors looking for exposure to the fast-growing AI space should invest in several AI companies, not just one. The AI realm is evolving very rapidly and it could prove risky to bet on just one long-term winner, even an established company, such as Broadcom.

Broadcom hits $1T market cap after CEO's 'huge' AI prediction

Broadcom is predicting a massive expansion in demand for chips that power AI -- and the market, for now, is buying it all the way. The company's valuation hit $1 trillion on Friday as its shares surged 21% after CEO Hock Tan said AI could present a $60 billion to $90 billion revenue opportunity in 2027, more than four times the current size of the market. Broadcom also forecast first-quarter revenue above estimates on Thursday. Several analysts said it was tough to estimate the market's growth and Broadcom's potential share, with TD Cowen noting the prediction is "difficult to prove/disprove, but is huge." Big Tech's push to diversify beyond Nvidia's pricey and supply-constrained AI processors has been a windfall for Broadcom, which makes custom chips for major cloud companies. Investors have also favored chipmakers that are already benefiting from the massive data centers being built by the likes of Microsoft and Meta amid worries about the payoff from AI investments for the wider tech industry. Broadcom CEO Tan said on Thursday the company has won two major hyperscaler customers, after it brought in $12.2 billion in AI revenue for fiscal 2024. That represented a major chunk of his estimated total serviceable market of $15 billion to $20 billion. Of the total 2027 opportunity, Broadcom could capture as much as $50 billion in AI sales based on the 70% market share Broadcom estimated it had in 2024, TD Cowen analysts said. But they warned modeling the company's share was difficult because the serviceable market could include processors sold by the likes of Nvidia. Rosenblatt Securities analyst Hans Mosesmann estimated a much lower market share for Broadcom in 2027 at between 20% and 50%. Investors, meanwhile, scooped up the stock that trades at a lower multiple than rivals. Broadcom has a 12-month forward price-to-earnings ratio of 29.8, compared with 31.03 for Nvidia, the first chip firm to hit $1 trillion in market value, according to data compiled by LSEG. "As AI shifts from training models to inference, more and more chip companies will gain an edge on Nvidia. Broadcom is the canary in the coalmine," said Thomas Hayes, chairman and managing member at Great Hill Capital. Shares of Nvidia and rival AI chipmaker AMD fell about 3%, while Broadcom's smaller competitor Marvell rose close to 9%. Contract chipmaker TSMC rose 4%. Broadcom's shares are up more than 60% this year, while Nvidia's stock has more than doubled, as of last close. The gains eclipse those in major cloud companies, with Microsoft up about 11% this year and Alphabet -- seen by analysts as Broadcom's biggest custom chip customer -- rising 40%. "They (Broadcom) went out of their way to give investors a reason to dream," Bernstein analyst Stacy Rasgon said. "The AI story seems to really be coming into its own, perhaps Hock might think about shopping for a leather jacket," Rasgon said, referring to Nvidia CEO Jensen Huang's signature style.

Broadcom's AI Chip Leadership Puts Pressure on Nvidia and Marvell, Analysts Say - Broadcom (NASDAQ:AVGO)

Broadcom reported Q4 revenue of $14.05B, driven by AI momentum.Analysts project AI revenue to reach $30B by 2027. Broadcom Inc AVGO stock surged Friday after it reported better-than-expected fourth-quarter adjusted EPS results and raised its quarterly common stock dividend. The company reported a topline of $14.05 billion, up from $9.3 billion, compared to the analyst estimate of $14.57 billion. EPS of $1.42 missed the analyst consensus of $1.46. Also Read: T-Mobile's Premium Valuation Prompts Downgrade As Growth Projections Decelerate: Analyst Broadcom expects first-quarter revenue of ~$14.60 billion, almost in line with the $14.61 billion consensus estimate. Multiple Wall Street analysts rerated the stock after the print: Rosenblatt analyst Hans Mosesmann maintained Broadcom with a Buy and raised the price target from $240 to $250. B of A Securities analyst Vivek Arya reiterated Broadcom with a Buy and raised the price target from $215 to $250. JP Morgan analyst Harlan Sur maintained Broadcom with an Overweight and raised the price target from $210 to $250. Rosenblatt: Broadcom came in with a slight beat on continued AI and networking momentum and some VMWare first-quarter pushouts. Non-AI dynamics continue to demonstrate modest cyclical recovery. The Street will pivot on management's disclosure of the line-of-sight AI serviceable available market (SAM) at its current custom ASIC (XPU) 3 hyperscaler customers of $60 billion -- $90 billion by 2027, up from the $15 billion -- $20 billion level in 2024. Interestingly, Broadcom has two new potential engagements that could eventually match the size of the current three. The AI 3-year outlook supports the ~60% CAGR of Advanced Micro Devices, Inc.'s AMD TAM of $500 billion for the 2027 and 2028 timeframes. Management implied strong prospects for maintaining AI custom ASIC leadership and share gains over Nvidia Corp NVDA GPUs. Broadcom already has working custom ASIC 3nm silicon that will ship this Spring, well ahead of anybody in the market. While custom ASIC sister Marvell Technology, Inc MRVL is also in the 3nm race, it is roughly a year behind Broadcom. Mosesmann's fiscal 2025 revenue and adjusted EPS estimates remain unchanged. B of A Securities: The rerating reflects Broadcom's expanding custom-chip (ASIC) AI, surging AI opportunity, and potential to maintain a position at large wireless customer Apple. Near-term results were inline, though the pushout of some software deals from the fourth to the first quarter helped Broadcom guide the first quarter inline versus concerns of missing due to seasonal headwinds, the analyst said. Arya projected fiscal 2025 revenue of $61.1 billion (prior $59.3 billion) and EPS of $6.27 (prior $6.00). He expects fiscal 2026 revenue of $70.2 billion (prior $68.5 billion) and EPS of $7.50 (prior $7.31). His forecast implies a growth trajectory of about 15% sales and 20% EPS over the next three years across a diversified silicon and infrastructure software base. Based on Broadcom's leading capabilities and IP in leading-edge logic, networking, memory, and interface design, Arya projected its AI sales to grow from $12 billion in the current year to about $30 billion by calendar 2027. However, Arya noted an upside to a 30% EPS CAGR towards $11-$12/share by calendar 2027, assuming AI sales get to $53 billion instead, based on Broadcom maintaining its current 70% share of a larger $75 billion SAM. There could be further upside since, per Broadcom, the stated range is only for its current three customer's "line-of-sight" intention to each build 1 million unit custom accelerator (XPU) clusters requiring an 80% and 20% mix of compute and networking. JP Morgan: Broadcom delivered solid fourth-quarter quarterly results on continued strong sequential growth in its AI semiconductor segment, which offset lower software revenues. For the first quarter, Broadcom guided revenues in line with consensus expectations and better than market expectations on sustained strong AI demand and software revenue acceleration. The fiscal 2024 AI revenues were $12.2 billion, up 3 times year-on-year. Sur expects them to grow to $17 billion-$18 billion (+40% Y/Y) in fiscal 2025, given continued strong cloud and hyperscaler capex spending trends with a focus on AI infrastructure build-out and second-half ramp of Alphabet Inc GOOG GOOGL Google's next-gen TPU v6 3nm AI accelerator ASIC. More importantly, Broadcom expects the AI SAM opportunity for its three existing cloud/hyperscalers to accelerate, driven by continued substantial investments in multi-generational XPU road maps and larger cluster sizes. Even applying a more conservative market share assumption, Sur noted that Broadcom's AI business is growing at a 40%- 50%+ revenue CAGR over the next several years. In the near term, despite a product handoff from the TPU v6 inference chip at 5nm to the TPU v6 training chip at 3nm, Broadcom is still guiding for sequential growth in its AI revenues for the first quarter. The TPU v6 3nm training chip will likely move into a high volume ramp in the second half of next fiscal year, and this one SKU Sur noted can drive $8 billion+ for Broadcom in fiscal 2025. Given its portfolio breadth, diversification, and product cycles, Broadcom continues to drive a stable revenue growth profile even during macro volatility. Broadcom generated strong free cash flow for the year, which resulted in an 11% dividend increase. Sur projected fiscal 2025 revenue of $62.7 billion and EPS of $6.50. Price Action: AVGO stock is up 19.7% at $216.20 at last check Friday. Also Read: Google Has The Ability To Scale AI By Leveraging Its Global User Base: Analyst Photo by Rokas Tenys via Shutterstock Market News and Data brought to you by Benzinga APIs

Is Broadcom Stock a Buy Now? | The Motley Fool

Investors looking for artificial intelligence (AI) stocks have plenty of options. But while there's no shortage of AI stocks to choose from, a few stand out among the rest. Broadcom (AVGO 5.32%) is one of the tech companies that is a unique play in the artificial intelligence market and could be a good long-term investment. Here are three reasons the stock is a buy right now. One of Broadcom's biggest opportunities comes from its application-specific integrated circuits (ASICs) that are used in AI data center infrastructure. Leading tech companies, including Alphabet and Meta Platforms, already use Broadcom's chips to help with their AI infrastructure, and more opportunities could be on the way. Companies continue to expand their data centers and AI training needs, creating the perfect environment for Broadcom's high-end niche semiconductors, with one J.P. Morgan analyst estimating the company's total addressable market in AI chips could be $150 billion. Results for the third quarter (ending Sept. 30) showed just how well Broadcom is tapping into its AI prospects, with management raising its fiscal 2024 AI chip sales outlook to $12 billion, an increase from its previous estimate of $11 billion. Broadcom is tapping into a unique AI opportunity with its ASICs at a time when tech giants are investing mountains of money into AI data centers. Goldman Sachs estimates that companies will spend $1 trillion over the next few years to build out AI, and Broadcom rival Nvidia thinks the amount could be as high as $2 trillion over the next five years. Broadcom's AI revenue is already increasing thanks to data center chip demand, and it's likely to continue as more companies expand their AI capabilities. At the end of October, ChatGPT creator OpenAI began tapping Broadcom to design an in-house chip it will use for AI. No matter which of the spending estimates is more accurate, it's clear that tech companies are investing lots of money on AI infrastructure, and Broadcom's early lead with its AI semiconductors should continue to pay off for the company as spending ramps up. Even with Broadcom's share price rising 96% over the past 12 months (as of this writing), its stock is slightly cheaper compared to some of its peers. Broadcom's forward price-to-earnings ratio (P/E) is currently 27.6, which is cheaper than Nvidia's forward P/E ratio of 34 and Advanced Micro Devices's 28.4. While it's not necessarily cheap, it is technically less expensive, making it a potentially better deal for investors looking for a well-priced AI stock. If you're on the fence about buying Broadcom now, you could wait to see if the shares pull back a bit. But with the company already successfully tapping into AI semiconductor demand and working with the top tech companies as AI spending is accelerating, owning its shares looks like a good long-term bet.

Broadcom stock soars 20% as AI demand powers the company to a $1 trillion market cap

What Steve Jobs might have done with AI, according to his former intern The chipmaker's shares were up by about 20% during Friday morning trading, pushing its market cap to $1.02 trillion. Broadcom stock is up by about 10o% so far this year. The San Jose-based company reported revenues of $14.05 billion for the fourth quarter ended in November -- a 51% increase from the previous year. Net income was $4.32 billion -- a 23% year-over-year increase. Meanwhile, revenue in Broadcom's semiconductor solutions group, which develops its AI chips, rose 12% from the same quarter last year to $8.23 billion. "Semiconductor revenue was a record $30.1 billion driven by AI revenue of $12.2 billion," Broadcom CEO Hock Tan said in a statement. "AI revenue which grew 220 percent year-on-year was driven by our leading AI XPUs and Ethernet networking portfolio." On the company's earnings call, Tan said Broadcom sees "our opportunity over the next three years in AI as massive." He added that "specific hyperscalers have begun their respective journeys to develop their own custom AI accelerators." Tan said Broadcom is developing AI chips, which it refers to as XPUs, with three of its hyper-scale customers, and that the company expects each customer to deploy one million AI chips in networked clusters by 2027. This could lead the total market opportunity for its XPUs and other AI networking to be between $60 billion and $90 billion in fiscal year 2027, Tan said. Broadcom set revenue guidance at $14.6 billion for the first quarter of fiscal year 2025.

Broadcom AI chip demand boosts sector stocks By Investing.com

On Friday, shares of semiconductor companies with a focus on artificial intelligence (AI) experienced notable gains following Broadcom (NASDAQ:AVGO)'s positive financial results, which highlighted a surge in demand for its custom AI chips. Broadcom's forecast for persistent growth in this area has seemingly lifted investor sentiment for the broader sector. Broadcom (NASDAQ:AVGO) reported a 220% annual increase in AI revenue, driven by demand for processors and networking components. Despite a projected downturn in non-AI chip demand in the first quarter, its stock soared by 14%. This upbeat announcement rippled through the industry, with several of Broadcom's competitors also seeing their shares rise. Marvell Technology (NASDAQ:MRVL) saw a 6.4% increase in its share price. Other semiconductor companies also benefited, with Micron Technology (NASDAQ:MU) up by 2.25%, Nvidia (NASDAQ:NVDA) climbing 1.5%, Advanced Micro Devices (NASDAQ:AMD) increasing by 1.4%, and Taiwan Semiconductor (NYSE:TSM) rising 2%. Analysts have taken note of the developments, with Morgan Stanley (NYSE:MS) commenting on the robust results despite expectations of a slowdown. The firm acknowledged the durability of the ASIC revenue cycles and the potential for investor interest to return to stocks with long-term momentum. They have adjusted their price target for Broadcom, raising it to $233 from $180, which represents a 29% upside from the current close. Raymond (NS:RYMD) James provided insights into Broadcom's financial quarter results and revenue outlook, which aligned with expectations. The call's highlight was management's projection of a $60-90 billion opportunity in AI by 2027 at its three hyperscale customers. This forecast is based on the construction of significant GPU/XPU clusters and could be further expanded with two new hyperscale customers. The projection suggests a compound annual growth rate of approximately 60% at these customers, a figure that aligns with the growth expectations of the overall accelerator market shared by peers like AMD. However, the firm also expressed caution, considering it premature to have conviction on the 2027 market share and SAM estimates, and indicated a preference for other companies like Nvidia, Marvell, AMD, Micron, and SemiCaps in the data center AI theme.

Shares of Broadcom jump on rising AI chip sales and 'massive opportunity' - SiliconANGLE

Shares of Broadcom jump on rising AI chip sales and 'massive opportunity' Shares of the computer chipmaker Broadcom Inc. made big gains in after-hours trading after the company reported a solid earnings beat and said its artificial intelligence revenue tripled compared to a year earlier. Broadcom Chief Executive Hock Tan (pictured) told analysts that the company is working with three so-called "hyperscalers", helping them to design AI chips. Such deals are likely to be extremely lucrative for the company, and its stock jumped more than 15% in the wake of those comments. The company reported fourth quarter earnings before certain costs such as stock compensation of $1.42 per share, beating the Street's consensus estimate of $1.38. Revenue shot up by an impressive 51% from the same period one year ago to $14.05 billion, though it still fell short of the $14.09 billion analyst target. All told, the company reported $4.32 billion in net income for the quarter, up from a profit of $3.52 billion one year ago. For the full fiscal year 2024, Broadcom delivered $51.57 billion in revenue, up 44% from the prior year, with its net income coming to $5.89 billion, down from the $14.08 billion profit it recorded a year earlier. Broadcom's biggest business segment is the semiconductor solutions group, which includes its AI chips, and revenue there rose 12% to $8.23 billion in the quarter. In a conference call with analysts, Tan revealed that the company is seeing unprecedented demand for generative AI infrastructure. As a result of this demand, its AI revenue for the full year jumped 220% to $12.2 billion. AI revenue includes both sales of specialist chips and also ethernet networking components, which are used to link thousands of chips together in clusters. "We see an opportunity over the next three years in AI," said Tan on the call. "Massive specific hyperscalers have begun their respective journeys to develop their own custom AI accelerators." Tan further elaborated, saying that Broadcom is working with three "very large customers", who it's helping to develop proprietary AI chips. He added that he expects each of those customers to deploy more than one million AI chips in networked clusters by the end of 2027. It will be very lucrative for Broadcom too. Tan said he believes the total market opportunity for AI chips, which the company refers to as "XPUs", together with AI networking components, is expected to grow to between $60 billion and $90 billion a year by that date. Tan didn't reveal who those three very large customers are. Yesterday, reports emerged that Broadcom is helping Apple Inc. to build a customized server processor to power its Apple Intelligence AI features, though the company declined to comment on the rumors. However, Apple is not usually referred to as a "hyperscaler", as that term is used to describe companies that operate fleets of large-scale data centers. Broadcom's fast-growing infrastructure software business reported $5.82 billion in sales during the quarter, almost tripling from the $1.96 billion it delivered one year ago. Most of that extra revenue comes from the acquisition of VMware, which closed in the year-ago quarter. Looking to the first quarter of the new fiscal year, Broadcom is anticipating sales of $14.6 billion, just above the Street's forecast of $14.58 billion. It didn't provide guidance for the full year. The company also said it's planning to increase its quarterly dividend by 11% in fiscal 2025 to 59 cents per share.

Should You Forget Nvidia and Buy This AI Stock Split Giant That's Soared More than 400% in 5 Years? | The Motley Fool

Nvidia (NVDA -2.69%) has proved itself to be one of the early winners in the artificial intelligence (AI) revolution, increasing earnings in the triple digits in recent quarters and pledging to keep innovating to supercharge growth. Stock performance has followed, with the shares soaring nearly 190% this year for the best performance in the Dow Jones Industrial Average -- Nvidia recently was invited to join this top benchmark. After all of these gains, though -- in earnings and in stock price -- you may be wondering if Nvidia still is the best AI player on the block, or if you should forget about Nvidia and turn to another growth story. One that's attracted some attention in recent times is a company that, like Nvidia, completed a stock split this year as its share price soared. Still, though, this particular company trades for a reasonable valuation and may have plenty of growth ahead. Should you choose this stock over stock market star Nvidia? Let's find out. So, which promising AI player am I talking about? A company that is known for networking -- in fact, it sells thousands of products used in many locations, from data centers to your smartphone. More than 99% of all Internet traffic passes through technology from this player. I'm talking about Broadcom (AVGO -3.98%). The company has a track record of earnings growth, and in recent times, two new growth drivers have emerged: AI and Broadcom's acquisition of cloud company VMware. Both of these businesses helped Broadcom increase revenue 47% in the most recent quarter to more than $13 billion. Broadcom says it's seen soaring demand from cloud service providers as they scale up their operations, and they're piling into AI networking and custom AI accelerators from Broadcom. In the quarter, the company said custom AI accelerator revenue tripled, Ethernet switching rose fourfold, and PCI Express switches doubled. Thanks to this strength, Broadcom now expects full-year AI revenue of $12 billion, up from an earlier estimate of about $11 billion. It's important to note that we may be in the early days of this AI demand as data centers upgrade current systems to prepare for accelerated computing. Nvidia chief Jensen Huang has said about $1 trillion in older computing systems exist today and must be updated over the next few years. This clearly could benefit Broadcom. As for VMware, Broadcom recently promoted its VMware Cloud Foundation at a conference in Las Vegas -- the product is a full software stack that virtualizes a data center and creates a private cloud for the customer. Bookings of the product helped the VMware platform reach an annualized booking value of $2.5 billion during the quarter, up more than 30% from the previous quarter. When Broadcom acquired VMware last year, the company aimed to generate adjusted EBITDA of $8.5 billion within three years. Today, Broadcom says it's on target to meet or beat that goal in the 2025 fiscal year. So, right now, Broadcom could be heading for a new wave of growth and one that could last quite some time. The company's stock has climbed more than 460% over the past five years and even reached beyond $1,000 earlier this year. Like Nvidia, Broadcom launched a 10-for-1 stock split to bring the price down to a level that's easier for a wider range of investors to access. This operation, completed in July, also suggests Broadcom is optimistic about its future and the potential of the stock to climb once again. Should you forget Nvidia and opt for this player right now? Nvidia still remains a great AI investment, but a look at valuation shows us that Broadcom represents a real bargain for investors looking for a potential AI winner. The stock trades for 28 times forward earnings estimates, compared with Nvidia at 47. So, though both companies make fantastic additions to a technology portfolio, right now Broadcom looks like a screaming buy.

Broadcom Hits $1 Trillion Milestone: The Next Magnificent Tech Giant? - Apple (NASDAQ:AAPL), Amazon.com (NASDAQ:AMZN)

Broadcom Inc. AVGO skyrocketed more than 20% during Friday morning trading, hitting all-time highs after its fiscal fourth-quarter earnings blew past Wall Street estimates. The semiconductor giant's growth narrative is now turbocharged by a massive artificial intelligence (AI) opportunity, with analysts projecting a multibillion-dollar windfall in the years ahead. The stock's surge catapulted Broadcom into the exclusive trillion-dollar market cap club, placing it as the eighth-largest publicly traded company, just behind Tesla Inc. TSLA. For context, the trillion-dollar elite is rarefied territory, shared only by the "Magnificent Seven" tech giants. Is Broadcom The Eighth Magnificent Tech Stock? December To Remember: Broadcom Eyes Record Month Since IPO With Friday's spike, Broadcom's stock has already rallied 33% in December, marking its strongest monthly performance since going public in 2009. The semiconductor heavyweight has now climbed an impressive 95% year-to-date, securing the title of the 10th-best-performing stock in the S&P 500 for 2024 thus far. When considering combined returns for 2023 and 2024, Broadcom ranks seventh in the benchmark index. Read Also: Nvidia, AMD, Taiwan Semi Gain As Broadcom's Q4 Performance Sparks Sector-Wide Surge Why Analysts Love Broadcom Bank of America's analyst Vivek Arya reiterated a "Buy" rating on Broadcom following the quarterly report, boosting the 12-month price target from $215 to $250 and hinting at a potential 15% upside from current levels. Arya's optimism stems from three main drivers: AI's Expanding Footprint: Broadcom's custom AI chips (ASICs) now serve five major customers, up from three previously. The company's AI-related revenue could soar to a served available market of $60-$90 billion by 2027 -- up from an estimated $15-$20 billion in 2023. Apple's Steady Demand: Broadcom is expected to maintain its strong relationship with Apple, despite prior concerns about declining content orders. Robust Earnings Growth: Analysts forecast a 15% sales growth and a 20% adjusted earnings-per-share (EPS) growth trajectory through 2026, underpinned by Broadcom's diversified portfolio spanning silicon and infrastructure software. "Broadcom's AI-driven growth potential and diversified base position it as one of the best opportunities in the chip sector," Arya said in a note, justifying their upward revision of earnings per share in fiscal year 2025 and 2026 by 5% and 3%, respectively. Read now: Apple's 2025 Chip Transition Targets New Wireless Edge, Broadcom To Retain Key Role Illustration was created using Shutterstock photos. Market News and Data brought to you by Benzinga APIs

Broadcom CEO Just Delivered Fantastic News for Artificial Intelligence (AI) Semiconductor Stock Investors

Jose Najarro has positions in Nvidia. The Motley Fool has positions in and recommends Nvidia. The Motley Fool recommends Broadcom. The Motley Fool has a disclosure policy. Jose Najarro is an affiliate of The Motley Fool and may be compensated for promoting its services. If you choose to subscribe through their link they will earn some extra money that supports their channel. Their opinions remain their own and are unaffected by The Motley Fool.

Broadcom shares soar as chipmaker forecasts 'massive' AI growth

Broadcom shares soared 18 per cent in pre-market Wall Street trading, sparking a rally in tech shares after the chipmaker posted huge gains in artificial intelligence revenues and projected "massive" growth in the field. Futures contracts indicated the tech-heavy Nasdaq Composite would open 0.8 per cent higher and the broader S&P 500, 0.4 per cent. Shares in Nvidia, the leading AI-related semiconductor maker, were up 1.6 per cent. Broadcom's confident outlook for its business supplying the chips needed for generative AI caught analysts' attention even as its quarterly results after the close on Thursday were roughly in line with market expectations. The group's AI-linked revenues soared 220 per cent in the fourth quarter from the same period in 2023. "We see our opportunity over the next three years in AI as massive," Hock Tan, its chief executive, told analysts, discussing the investing plans of its biggest customers. "For each of them, this represents a multi-year, not a quarter-to-quarter journey." Tan estimated that the addressable AI market for Broadcom by 2027 would be between $60bn and $90bn, from less than $20bn currently. "We are very well positioned to achieve a leading market share in this opportunity," Tan added, though he warned the gains would not be linear but vary each quarter. Analysts at JPMorgan Chase raised their price target for the stock to $250 from $210, adding: "Even applying a more conservative market share assumption, we can see Broadcom's AI business growing at a 40-50 per cent-plus revenue (compound annual rate) over the next several years." Shares in Broadcom have gained 62 per cent this year to about $180 before Thursday's results, trailing Nvidia, the AI chip leader, which has gained 180 per cent. Broadcom shares traded around $213 in pre-market trading on Friday, leaving the company set to add more than $140bn in market value. Leading AI companies such as OpenAI have been seeking ways to reduce their reliance on Nvidia's cutting-edge technology and deepen their supply chains. "AI is still driving the bus," said analysts at Citigroup.

Broadcom Inc. (NASDAQ: AVGO) Surges 13% on AI Growth and Promising Projections in Q4 2024 Earnings

Broadcom remains a top leading industry in the tech industry as its stock rose 13% after the release of its fiscal Q424 results. Driven by an increase in the AI market and the continuing strong demand for semiconductors, Broadcom's results edged past forecasts of its analysts to prove that it knows how to profit from new tech trends. In this article, still, we will look at its phenomenal year, AI-driven revenues, acquisitions' scheme, and the fiscal 2025 and even further forecast.

Broadcom stock jumps 21%, pushing company past $1 trillion market cap for the first time

Shares of Broadcom popped more than 21% Friday morning, pushing the company's market cap beyond $1 trillion for the first time. It'll be Broadcom's best trading day on record if the move holds until the closing bell. The move comes after the company reported fourth-quarter results that beat Wall Street's expectations for earnings and showed strong artificial intelligence revenue growth. Broadcom reported $14.05 billion in revenue for the fourth quarter, up 51% year over year but shy of the $14.09 billion expected by analysts according to LSEG. In Broadcom's semiconductor solutions group, which includes its AI chips, revenue increased 12% to $8.23 billion from $8.03 billion a year ago. The company said AI revenue jumped 220% for the year to $12.2 billion. The stock popped in after-hours trading Thursday when Broadcom CEO Hock Tan said the company is developing custom AI chips with large cloud customers. Broadcom's net income came in at $4.32 billion, or 90 cents per share, up 23% from $3.52 billion, or 83 cents per share, in the same quarter a year earlier. Bernstein analysts wrote in a Friday note that Tan might look good in a leather jacket, a nod to Nvidia CEO Jensen Huang's signature style. They said there were a lot of nerves ahead of Thursday's results, but Broadcom's fourth-quarter earnings were "decent" and they were encouraged by management's near-term and longer-term vision for AI. The analysts raised their price target on the stock to $250 from $195. "Overall the AI story seems to really be coming into its own," the analysts wrote. Analysts at Bank of America reiterated their buy rating on the stock, in part because of its "surging AI opportunity." They said Broadcom currently dominates the market for custom chips for internal workloads, but they cautioned that there is some risk from the "stiff competition against NVDA's stronghold in merchant silicon and enterprise customers." Morgan Stanley analysts said Broadcom's commentary around AI will likely add to long-term enthusiasm around the company, which they expect will continue to build. They said Broadcom remains "one of the most compelling ways to play AI semis" over the next two to three years. "Overall, the quarter itself will provide a relief vs. low nearer term expectations, and the longer term commentary around AI will stoke enthusiasm for custom AI chip longer term prospects - enthusiasm that was already at a fever pitch," the analysts wrote in a Friday note.

Broadcom's AI Edge: 'Apples-to-Oranges Comparison' Shows ASICs Outgrowing GPUs, Says Analyst - Broadcom (NASDAQ:AVGO)

Analyst sees AI ASICs outpacing GPUs, with Broadcom set for long-term success despite competition. With fourth quarter results set to be unveiled on Dec. 12, Broadcom Inc. AVGO is projected to deliver a standout performance. Rosenblatt analyst Hans Mosesmann expects a "beat and modest raise" for the quarter, driven by the company's surging AI-related silicon revenue and VMware upside. Broadcom's AI networking revenue is forecast to hit $3.5 billion this quarter, growing 10% sequentially. "We see revenues being driven by AI-related silicon strength," says Mosesmann. The anticipated fourth quarter revenue of $14.0 billion would reflect a 51% year-over-year increase, solidifying Broadcom's position as an AI powerhouse. Read Also: Broadcom Enhances Open-Source Ecosystem with Bitnami Premium Release 2025 Outlook: AI Leads, But Non-AI Plays Recover Looking ahead, Mosesmann foresees Broadcom guiding above consensus for the January quarter. With AI-related revenue expected to exceed $12 billion in 2024, the momentum doesn't stop there. He predicts, "Non-AI semiconductor revenue should continue its recovery in CY25, while Infrastructure Software is likely to be driven by VMware strength." ASICs Vs. GPUs: A Win For Both The competitive landscape between Broadcom's custom ASICs and Nvidia Corp's NVDA GPUs often sparks debate, but Mosesmann calls it "an apples-to-oranges comparison." He adds, "We see AI ASICs outgrowing GPU compute over the next several years," highlighting Broadcom's growth potential in AI acceleration, Gen AI and networking across Cloud and Edge. A Strong Setup For 2025 Mosesmann reiterates his Buy rating on Broadcom with a $240 price target, backed by "a low-30s P/E multiple on our FY26 Non-GAAP EPS." As Broadcom CEO Hock Tan emphasizes that AI compute will thrive on "open" industry connectivity standards, the company looks well-positioned for long-term success. Read Next: Broadcom Stock Jumps On Apple AI Chip Report: What's Going On? Photo: Shutterstock Market News and Data brought to you by Benzinga APIs

Why Stock-Split and Artificial Intelligence (AI) Stock Broadcom Blasted Higher on Friday | The Motley Fool

The catalyst that sent the artificial intelligence (AI) specialist higher was Broadcom's strong financial results, fueled by robust demand for AI. For its fiscal 2024 fourth quarter (ended Nov. 3), Broadcom generated revenue that surged 51% year over year to $14 billion. This fueled adjusted earnings per share (EPS) that jumped 31% to $1.42. The results were mixed in the light of expectations, though profitability was stronger than many had expected. For context, analysts' consensus estimates forecast revenue of $14.1 billion and EPS of $1.39. Management pointed to a surge in demand for AI products that drove the results. AI networking revenue soared 158% year over year. The company noted that sales of custom accelerators (XPUs) doubled, while revenue from connectivity products grew fourfold. For the upcoming first quarter, Broadcom is guiding for revenue of $14.6 billion, ahead of Wall Street's expectations of $14.47 billion. Management also expects its margins to expand, driving its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) to 66% of revenue, up from 65% in the current quarter. Broadcom makes many of the supplementary products used in data centers, which is where most AI processing happens. The writing was on the wall earlier this year when consistently strong business and financial results pushed the stock higher, which prompted the company to initiate a 10-for-1 stock split, which was completed in July. Management clearly expects this strong demand to continue and is forecasting AI revenue of $60 billion to $90 billion by fiscal 2027. That works out to growth of between 391% and 638% over the coming three years, compared to $12.2 billion in AI revenue in fiscal 2024. This could well be conservative, as Broadcom announced the addition of two new hyperscale customers (not included in its forecast), which could propel growth even higher. Broadcom stock is currently trading for 36 times forward earnings. While that's admittedly a premium, it's a fair price to pay for a company that's growing like gangbusters, providing the critical infrastructure needed to fuel the AI revolution.

Broadcom forecasts Q1 revenue above estimates on strong AI chip demand

Big tech has been vying to reduce its dependence of pricey, supply-constrained AI processors made by front-runner Nvidia , helping Broadcom which makes advanced custom artificial intelligence chips for so-called hyperscalers. Demand for Broadcom's networking chips that help move around vast amounts of data used by applications such as OpenAI's ChatGPT has also increased, as businesses double down on investments in GenAI infrastructure.Broadcom forecast quarterly revenue above Wall Street estimates on Thursday and predicted booming demand for its custom artificial intelligence chips in the next few years. Shares of the Palo Alto, California-based company were up 14% in aftermaket trade after CEO Hock Tan told investors on a conference call he expects a revenue opportunity from AI in the range of $60 billion to $90 billion in fiscal 2027. Tan indicated three "hyperscale" customers are likely to deploy millions of AI chip clusters at the time. Big tech has been vying to reduce its dependence of pricey, supply-constrained AI processors made by front-runner Nvidia , helping Broadcom which makes advanced custom artificial intelligence chips for so-called hyperscalers. Demand for Broadcom's networking chips that help move around vast amounts of data used by applications such as OpenAI's ChatGPT has also increased, as businesses double down on investments in GenAI infrastructure. "Broadcom's strong performance doesn't come as a surprise. It's one of several companies benefiting from AI invigorating the global semiconductor industry, with its AI revenue growing 220% this year," said eMarketer analyst Jacob Bourne. The company forecast revenue of about $14.6 billion for the first quarter, compared with analysts' average estimate of $14.57 billion according to data compiled by LSEG. Analysts, however, have raised doubts about the amount of potential future business from Apple, one of Broadcom's most significant wireless customers, as the iPhone maker works to design more of its chips in-house. Apple's plans will include switching to a homegrown chip for Bluetooth and Wi-Fi connections starting next year, replacing some parts currently provided by Broadcom, Bloomberg News reported earlier on Thursday. Though the company faces intense competition from Nvidia's ethernet-like Infiniband products, Broadcom still benefits from the expansion of AI data centers as it is one of the largest providers of advanced networking equipment. "Broadcom will continue to be a relevant player in the custom AI ASIC market together with companies like Marvell as tier-1 hyperscalers will continue to introduce their in-house chips," Summit Insights senior analyst Kinngai Chan said. Application-Specific Integrated Circuit, or ASICs, are chips designed for specific tasks or applications. While hailed as a chipmaker, Broadcom has proliferated into a tech conglomerate owing to buyouts such as its $69 billion acquisition of cloud-computing firm VMware. The infrastructure software segment grew 196% from a year earlier to $5.82 billion in the fourth quarter. The company reported fourth-quarter revenue of $14.05 billion, a jump of over 50% from a year earlier. Analysts had expected $14.09 billion. On an adjusted basis, Broadcom earned $1.42 per share compared with estimates of $1.38 per share.

Broadcom Sees 4X Surge In AI Chip Sales, Fueling 44% Revenue Growth To Record $51.6 Billion In 2024: CEO Expects Momentum To Remain 'Strong' - Broadcom (NASDAQ:AVGO)

There was a significant reduction in VMware spending in the fourth quarter. Broadcom Inc. AVGO stock rose over 14.4% in premarket on Friday after the management in its earnings call said that they saw a four-fold increase in AI connectivity revenue driven by Tomahawk and Jericho shipments. The management highlighted a significant reduction in VMware spending in the fourth quarter. What Happened: The company doubled the AI XPU shipments to hyperscale customers, which signifies a growing need for specialized hardware to power AI applications. "In Q1, we expect the momentum in AI connectivity to be as strong as more hyperscalers deploy Jericho3AI in their fabrics. Our next-generation XPUs are in three nanometers and will be the first of its kind coming to market in that process node," said Hock E Tan, the president, CEO, and director. Broadcom also said that customers are increasingly adopting private cloud environments on-premises using VCF. This shift has led to a significant reduction in VMware spending, down to $1.2 billion in the fourth quarter from $1.3 billion in the third quarter. "We brought spending down to $1.2 billion in Q4, down from $1.3 billion in Q3. By reference, VMware spending was averaging over $2.4 billion per quarter prior to the acquisition with operating margin less than 30%," Tan added during the earnings call. The call also highlighted that VMware's Annualized Billing Value (ABV) is expected to surpass $3 billion in the first quarter, up from $2.7 billion in the previous quarter. Why It Matters: Broadcom reported quarterly earnings of $1.42 per share, which beat the analyst consensus estimate of $1.38. Quarterly revenue came in at $14.05 billion, which slightly missed the consensus estimate of $14.09 billion and is an increase over sales of $9.295 billion from the same period last year. "Broadcom's fiscal year 2024 revenue grew 44% year-over-year to a record $51.6 billion, as infrastructure software revenue grew to $21.5 billion, on the successful integration of VMware," said Hock Tan, CEO of Broadcom Inc. "Semiconductor revenue was a record $30.1 billion driven by AI revenue of $12.2 billion. AI revenue which grew 220 percent year-on-year was driven by our leading AI XPUs and Ethernet networking portfolio," Tan added. Overall, the rapidly evolving AI landscape, with significant investments and advancements being made in AI hardware and networking infrastructure will be driving the future quarter. See Also: Broadcom Reports Mixed Q4 Results: EPS Beat, Revenues Miss, Q1 Guidance In Line With Estimates Price Action: Broadcom stock has gained over 66% year-to-date, outperforming the Nasdaq 100 index, which grew by 30.65% in the same period. What Are Analysts Saying: According to Benzinga Pro data, the average price target of $215 based on the last three ratings from Rosenblatt, Citigroup, and UBS implies a 19% upside for Broadcom from its closing price on Thursday. Read Next: 'Markets Have The Green Light To Rally' After November's 'Yawner' Inflation Report, Experts Say Photo courtesy: Wikimedia Market News and Data brought to you by Benzinga APIs

Broadcom beats on profit, says AI revenue more than tripled this year

Broadcom reported better-than-expected fourth-quarter earnings on Thursday and said artificial intelligence revenue for the year more than tripled. The chipmaker's stock ticked higher in extended trading. Here's how Broadcom did versus LSEG consensus estimates for the quarter ending Nov. 3: Broadcom said it expects first-quarter revenue of about $14.6 billion, just ahead of the $14.57 billion average analyst estimate. For the fourth quarter, year-over-year revenue increased 51% from $9.3 billion. Net income in the fourth quarter came in at $4.32 billion, or 90 cents per share, up 23% from $3.52 billion, or 83 cents per share, in the same quarter a year earlier. In its semiconductor solutions group, which includes the company's artificial intelligence chips, revenue increased 12% to $8.23 billion from $8.03 billion a year ago. Broadcom is seeing soaring demand from the boom in generative AI infrastructure. For the year, the company said AI revenue jumped 220% to $12.2 billion. Some of that growth is from ethernet networking parts, which are used to tie together thousands of AI chips. Broadcom said its infrastructure software division generated $5.82 billion in revenue for the quarter, nearly tripling from last year's $1.96 billion. That includes a boost from the $69 billion acquisition of VMware, which was completed after the year-ago quarter. Broadcom said it would increase its quarterly dividend by 11% in fiscal 2025 to 59 cents per share.

Broadcom stock hits record high on positive guidance, CEO comments By Investing.com

Investing.com-- Shares of network equipment maker Broadcom Inc (NASDAQ:AVGO) hit a record high in aftermarket trade on Thursday evening after the company forecast stronger-than-expected revenue for the current quarter. Broadcom's gains were also driven by positive comments by CEO Hock Tan during the earnings call, as Tan highlighted increased tailwinds from the artificial intelligence industry. Broadcom surged more than 15% to hit an indicated record high of over $207. Gains in the stock spilled over into other chipmakers, with NVIDIA Corporation (NASDAQ:NVDA) and AMD (NASDAQ:AMD) rising 1.1% and 0.7%, respectively. Broadcom clocked a stronger-than-expected profit for the quarter to November 30. The firm forecast revenue of $14.6 billion for the current quarter, slightly above estimates of $14.57 billion. The firm also hiked its quarterly dividend by 11% to 59 cents. A bulk of Broadcom's gains came after CEO Tan flagged increasing revenues from the AI industry. Tan said the company expects a $15 billion to $20 billion market for its AI accelerators in 2025. Tan also said the company remained open to more dealmaking activity, which he said has been part of Broadcom's strategy for at least the past decade. The company has slowly become a tech conglomerate through a series of acquisitions, most recently being its $68 billion buy of cloud firm VMware (NYSE:VMW). Gains in Broadcom also came after The Information reported the company was working with Apple Inc (NASDAQ:AAPL) to develop a server chip designed specifically for artificial intelligence. Apple is Broadcom's biggest customer for wireless chips used in mobile phones, but is reportedly planning to develop its own in-house chips.

Broadcom's Earnings Exceed Expectations on AI Revenue Growth

Broadcom (AVGO) reported fiscal fourth-quarter earnings that topped analysts' expectations, sending shares higher in extended trading Thursday. The chipmaker saw fourth-quarter revenue grow 51% year-over-year to $14.05 billion, roughly in line with the analyst consensus compiled by Visible Alpha. Net income came in at $4.32 billion or 90 cents per share, up from $3.52 billion or $8.25 per share a year earlier, beating expectations. The strong results come after Broadcom posted a loss of $1.88 billion last quarter, due in part to increased expenses related to its November 2023 acquisition of software company VMware. However, the integration helped boost Broadcom's revenue to a record high for fiscal 2024. "Broadcom's fiscal year 2024 revenue grew 44% year-over-year to a record $51.6 billion, as infrastructure software revenue grew to $21.5 billion, on the successful integration of VMware," CEO Hock Tan said in a release. Tan also noted Broadcom's full-year revenue from artificial intelligence (AI) more than tripled to $12.2 billion, slightly beating its previous outlook of $12 billion. Looking ahead, Broadcom forecast fiscal first-quarter revenue of $14.6 billion, above analysts' estimates. Broadcom shares surged over 14% in extended trading Thursday following the release. They were up 62% for 2024 through Thursday's close.

Broadcom Shares Boom on Explosive AI Chip Growth Projection

Broadcom CEO Hock Tan said Thursday the company's artificial intelligence chip and networking business, which includes designing chips for companies including Google, OpenAI and Apple, could generate tens of billions of dollars in revenue in the fiscal year that ends in November 2027. That means that conservatively, Broadcom leaders believe revenue from that part of its business will rise at

Broadcom Likely For Upside Backed By AI Pipeline, Market Recovery, VMWare Synergy: Analyst - Broadcom (NASDAQ:AVGO)

Sur noted strong demand profile for AI products, continued cyclical recovery in its diversified semiconductor (ex-AI) end markets, and more. JP Morgan analyst Harlan Sur maintained an Overweight rating on Broadcom Inc AVGO with a price target of $210. Broadcom will report fiscal fourth-quarter 2024 earnings on Thursday. Sur noted a strong demand profile for AI products, continued cyclical recovery in its diversified semiconductor (ex-AI) end markets, and unlocked VMWare revenue synergy. As a result, the analyst expects revenue, earnings, and free cash flow to be better than JP Morgan and consensus expectations (revenues coming in at $14.2 billion-$14.3 billion versus consensus at $14.1 billion). He projected an adjusted EPS of $1.40. Also Read: Jack Ma Makes Rare Appearance At Alibaba Fintech Event Stresses On AI Revolution Off of a higher fourth-quarter base, Sur noted fiscal first-quarter 2025 revenue guidance at $14.2 billion-$14.4 billion or flattish sequential growth below consensus of $14.64 billion) and closer to the analyst's below-Street estimates of $14.4 billion. He projected an adjusted EPS of $1.46. Sur noted the lower revenue guidance is due to more seasonal trends in its core semiconductor businesses combined with a product transition at its large AI ASIC customer Google, but partially offset by continued strong software renewals at VMware and strong AI networking. Sur noted that the AI production transition involves a product handoff from the TPU inference chip at 5 nm to the TPU v6 training chip at 3nm, which should cause a temporary AI ASIC revenue pause in the first quarter. However, Sur expects sequential growth to resume in the second quarter as the TPU v6 3nm training chip moves into a high-volume ramp. This should be a strong tailwind for the remainder of fiscal 2025. Overall, for fiscal 2025, Sur expects revenue and EPS upside for the full year, continued strong demand for its AI products, and a more synchronized end market recovery in its diversified semiconductor (ex-AI) end markets as the year unfolds. Sur expects Broadcom to drive ~$12 billion-$12.5 billion in AI revenues in fiscal 2024 (up three times year-on-year) with adjusted EPS of $4.84 and drive $17 billion-$18 billion in AI revenues in fiscal 2025 (40%+ growth) and adjusted EPS of $6.34 on the continued strong ramp of Google's TPU AI processor and full-blown production ramp in Meta Platform Inc's MTIA AI 3nm processor combined with continued strong demand for its AI networking products and start of Tomahawk 6 ramp. More importantly, Sur noted the team continues to meaningfully expand its AI ASIC customer design win and engagement pipeline and has recently expanded its AI customer engagement base to six customers from five customers. In the longer term, Sur noted a plus $30 billion pipeline of AI revenue opportunities per AI customer over the next 4-5 years -- or over $150 billion in cumulative AI revenue opportunity -- and implies a 30%-40% AI semi-revenue CAGR over this period of time. In the software infrastructure business, Sur noted continued strong momentum in its VMware business on strong software renewals with its large corporate customers. He expects Broadcom to boost its dividend growth by double-digits year-on-year. Overall, Sur flagged sustained strong AI fundamentals and aggressive synergy and value creation in the software business. The team is the second largest global AI semiconductor supplier and largest custom chip ASIC supplier, leading to the rating reiteration. Price Action: AVGO stock is down 1.55% at $176.75 at last check Monday. Also Read: Adobe Poised To Lead With Strong Subscriptions, Analyst Says Image via Shutterstock. Market News and Data brought to you by Benzinga APIs

Watch These Broadcom Price Levels as Stock Soars on Strong AI Sales Growth

The company said its fiscal 2024 AI revenue more than tripled, driven by its AI XPUs and Ethernet networking portfolio. After-hours gains accelerated after CEO Hock Tan told analysts on the company's earnings call that he anticipates significant AI opportunities over the next three years, adding that he sees accelerators and networking sales in fiscal 2027 ranging between $60 billion and $90 billion. Through Thursday's close, Broadcom shares had gained 64% since the start of the year. The stock rose 14% to around $206 in extended trading. Indeed, the price sits poised to break out above the formation's top trendline on Friday, setting the stage for further upside. Moreover, the relative strength index (RSI) gives a reading just above 50, confirming bullish momentum and indicating the shares have ample room to test higher prices as they move into price discovery. To forecast an upside target in the stock, investors can use the bars pattern tool, which analyzes prior trends to help predict future directional moves. When applying the tool to Broadcom's chart, we extract the stock's trend higher from December 2023 to June this year and reposition it from the ascending triangle's top trendline. This projects a longer-term upside target of around $315. We selected this prior move as it commenced following a decisive earnings-driven jump above a continuation pattern on the chart in December last year, similar price action to what looks likely after the company's latest quarterly report. Key Support Levels to Watch During Pullbacks During pullbacks, investors should initially watch how the price reacts to the $185 level. This location on the chart would likely attract buying interest near the ascending triangle's top trendline, which may flip from an area of prior resistance into future support. Selling below this level could see Broadcom shares revisit lower support around $140, an area where investors may seek buying opportunities near a horizontal line that connects a series of comparable trading activity on the chart between February and September. The comments, opinions, and analyses expressed on Investopedia are for informational purposes only. Read our warranty and liability disclaimer for more info.

Broadcom delivers upbeat guidance as AI-related revenue soars By Investing.com

Investing.com - Broadcom on Thursday delivered upbeat revenue guidance for the current quarter amid surging AI-revenue, though the chipmaker reported mixed Q4 results as revenue fell just short of estimates. Broadcom Inc (NASDAQ:AVGO) shares gained 4% in after-hours trade following the report. For three months ended Nov. 3, the chipmaker announced earnings per share of $1.42 on revenue of $14.05 billion. Analysts polled by Investing.com anticipated EPS of $1.39 on revenue of $14.07 billion. Semiconductor solutions, its core business, jumped 12% to $8.23B, while infrastructure software rose 196% to $5.82B. For 2024, semiconductor revenue was a "record $30.1 billion driven by AI revenue of $12.2 billion," the company said. "AI revenue which grew 220 percent year-on-year was driven by our leading AI XPUs and Ethernet networking portfolio," it added. Looking ahead, the chipmaker said it expects Q1 revenue of $14.6B, above consensus of $14.55B.

Broadcom Predicts AI Sales Surge, Pushing Shares Higher

Broadcom predicted a boom in demand for its artificial intelligence chips, saying sales of AI products will gain 65% in the fiscal first quarter during a post-earnings conference call. Tom Mackenzie reports on Bloomberg Television. (Source: Bloomberg)

Broadcom: Bullish Momentum Builds As Q4 Earnings, Apple Partnership Take Center Stage - Broadcom (NASDAQ:AVGO)

Analysts project an 18.46% upside for Broadcom stock, supported by bullish technical and fundamental signals. Broadcom Inc AVGO will be reporting its fourth-quarter earnings on Thursday. Wall Street expects $1.38 in EPS and $14.10 billion in revenues as the company reports after market hours. The stock is up 70.85% over the past year, 20.28% over the past six months. Apple Partnership Builds Bullish Momentum Apple Inc. AAPL is reportedly partnering with Broadcom to develop its first AI-focused server chip, code-named Baltra, expected to enter mass production by 2026. According to The Information, Apple plans to leverage Taiwan Semiconductor Manufacturing Co.'s TSM advanced N3P process for production. This move aligns with a broader trend among tech giants, including Alphabet Inc's GOOGL GOOG Google, Amazon.com Inc AMZN, Microsoft Corp MSFT, and Meta Platforms Inc META, to design proprietary AI chips, reducing reliance on third-party suppliers like Nvidia Corp NVDA. This partnership highlights Broadcom's growing role in the AI ecosystem as it prepares to report its fourth-quarter earnings. Let's look at what the charts indicate for Broadcom stock and how the stock currently maps against Wall Street estimates. Read Also: How To Earn $500 A Month From Broadcom Stock Ahead Of Q4 Earnings Broadcom Stock Strongly Bullish Ahead Of Q4 Earnings Broadcom stock exhibits a strongly bullish trend, with its share price of $183.20 consistently trading above the five-, 20- and 50-day exponential moving averages, signaling sustained buying pressure. Chart created using Benzinga Pro Broadcom stock is technically bullish, supported by multiple bullish signals across key moving averages: the eight-day SMA at $175.08, the 20-day SMA at $168.81, the 50-day SMA at $173.84 and the 200-day SMA at $154.41. Additionally, the Moving Average Convergence Divergence (MACD) indicator stands at 1.62, reinforcing the bullish outlook. With a Relative Strength Index (RSI) of 56.28, AVGO stock remains comfortably within bullish territory, indicating further potential for upward momentum. Broadcom Analysts See 18.5% Upside Ratings & Consensus Estimates: The consensus analyst rating on Broadcom stock stands at a Buy currently with a price target of $1,047.81. The latest analyst ratings from Rosenblatt, Citigroup and UBS imply an 18.46% upside for Broadcom stock with an average price target of $215. AVGO Price Action: Broadcom stock is down 1.78% at $179.93 on Thursday at publication. Read Next: Broadcom's AI Edge: 'Apples-to-Oranges Comparison' Shows ASICs Outgrowing GPUs, Says Analyst Photo: Shutterstock AVGOBroadcom Inc$179.62-1.95%Overview Rating:Speculative50%Technicals Analysis1000100Financials Analysis200100WatchlistOverviewAAPLApple Inc$248.500.82%AMZNAmazon.com Inc$230.06-0.09%GOOGAlphabet Inc$195.71-0.51%GOOGLAlphabet Inc$194.06-0.69%METAMeta Platforms Inc$630.72-0.31%MSFTMicrosoft Corp$453.681.04%NVDANVIDIA Corp$138.05-0.90%TSMTaiwan Semiconductor Manufacturing Co Ltd$192.70-0.66%Market News and Data brought to you by Benzinga APIs

Broadcom forecasts first-quarter revenue above estimates

Dec 12 (Reuters) - Broadcom (AVGO.O), opens new tab forecast its first-quarter revenue above Wall Street estimates on Thursday, betting on booming demand for its custom artificial intelligence chips and networking gear from cloud providers doubling down on GenAI infrastructure adoption. The company forecast revenue of about $14.6 billion for the first quarter, compared with analysts' average estimate of $14.57 billion according to data compiled by LSEG. Shares of the Palo Alto, California-based company rose 4.1% in extended trading, having gained about 60% so far this year as one of the largest beneficiaries of a rally in AI-linked shares. Demand for the company's networking chips that help move around vast amounts of data used by applications such as OpenAI's ChatGPT has also increased, as businesses double-down on investments in GenAI infrastructure. The company recorded net income of $4.32 billion in the fourth quarter, up around 23%. Analysts expected $3.56 billion. Reporting by Arsheeya Bajwa and Zaheer Kachwala in Bengaluru; Editing by Krishna Chandra Eluri Our Standards: The Thomson Reuters Trust Principles., opens new tab Suggested Topics:Artificial Intelligence

Broadcom Earnings Top Estimates After AI Fuels Sales Growth

Broadcom Inc., a chip supplier for Apple Inc. and other big tech companies, posted better-than-expected profit in the fourth quarter after artificial intelligence demand helped bolster growth. Profit was $1.42 a share in the period, excluding some items, the company said in a statement Thursday. Revenue rose to nearly $14.1 billion. Analysts had estimated $1.39 a share in earnings and revenue of $14.1 billion on average, according to data compiled by Bloomberg.

Broadcom reports 51% revenue surge in Q4, lifts dividend By Investing.com

PALO ALTO, Calif. - Broadcom Inc. (NASDAQ:AVGO), a prominent player in semiconductor and infrastructure software solutions with a market capitalization of $844 billion and impressive year-to-date returns of 66%, disclosed its financial outcomes for the fourth quarter of fiscal year 2024, ending November 3, 2024. According to InvestingPro analysis, the company currently trades above its Fair Value, reflecting strong investor confidence in its growth trajectory. The company revealed a significant 51% increase in quarterly revenue, reaching $14.054 billion compared to the previous year. This surge was accompanied by a rise in GAAP net income to $4.324 billion and Non-GAAP net income to $6.965 billion for the same period. The company's adjusted EBITDA stood at $9.089 billion, representing 65% of its quarterly revenue. Additionally, Broadcom announced an 11% hike in its quarterly common stock dividend to $0.59 per share. InvestingPro data reveals that Broadcom has maintained dividend payments for 15 consecutive years, with a 15.2% dividend growth in the last twelve months. The company maintains a "GOOD" overall financial health score, operating with a moderate level of debt. Looking ahead, the company provided revenue guidance for the first quarter of fiscal year 2025, projecting about $14.6 billion, a 22% increase from the prior year. Broadcom's President and CEO, Hock Tan, attributed the robust fiscal year 2024 revenue growth of 44% to a record $51.6 billion, to the successful integration of VMware (NYSE:VMW) and a significant increase in infrastructure software revenue, which grew to $21.5 billion. The semiconductor segment also experienced record revenue of $30.1 billion, driven by a 220% year-on-year growth in AI revenue, which amounted to $12.2 billion. The company's CFO, Kirsten Spears, highlighted the adjusted EBITDA increase of 37% year-over-year to a record $31.9 billion and the strong free cash flow excluding restructuring at $21.9 billion. This financial strength has led to the increase in the quarterly dividend. For the fourth fiscal quarter, Broadcom generated $5.604 billion in cash from operations, with capital expenditures of $122 million resulting in $5.482 billion of free cash flow, equating to 39% of revenue. The company's cash and cash equivalents totaled $9.348 billion at the end of the quarter. The company's Board of Directors has approved the quarterly cash dividend, payable on December 31, 2024, to stockholders of record as of 5:00 p.m. Eastern Time on December 23, 2024. These financial results are based on a press release statement and reflect the company's performance and future expectations. InvestingPro subscribers can access 14 additional investment tips and comprehensive analysis for Broadcom, including detailed valuation metrics and growth forecasts. The stock currently has a strong analyst consensus recommendation of 1.47 (where 1 is Strong Buy), with price targets ranging from $155 to $240 per share. In other recent news, Broadcom Limited has maintained a strong financial performance, with a reported 32.04% revenue growth and a 74.71% gross profit margin in the last twelve months. The company has issued $5 billion in senior notes, aimed at repaying existing debt. Bernstein SocGen Group continues to hold a positive outlook on Broadcom, maintaining its Outperform rating and $195.00 price target. Meanwhile, Mizuho (NYSE:MFG) Securities has raised its price target for Broadcom to $220, reflecting the potential revenue from Broadcom's collaboration with OpenAI on custom AI chips. Broadcom's recent developments also include the launch of Bitnami Premium, an enterprise version of the popular open-source software catalog Bitnami. The company has also formed a partnership with Arrow Electronics (NYSE:ARW) as the global distributor for the new offering. Furthermore, Broadcom unveiled Sian™2, a 200G/lane PAM-4 DSP PHY designed to enhance data center connectivity for AI applications. HSBC (LON:HSBA) initiated coverage on Broadcom shares with a Hold rating and a price target of $160.00, while BofA Securities maintained its Buy rating on Broadcom shares, affirming a $215.00 price target. These ratings reflect the analysts' positive outlook on the company's potential growth in the AI sector and its robust financial structure. These are among the recent developments in Broadcom's ongoing activities in the capital markets.

Broadcom Reports Mixed Q4 Results: EPS Beat, Revenues Miss, Q1 Guidance In Line With Estimates - Broadcom (NASDAQ:AVGO)

Quarterly revenue comes in at $14.05 billion, which slightly missed the consensus estimate of $14.09 billion. Broadcom Inc. AVGO reported its fourth-quarter results after Thursday's closing bell. Here's a look at the key figures from the quarter. The Details: Broadcom reported quarterly earnings of $1.42 per share, which beat the analyst consensus estimate of $1.38. Quarterly revenue came in at $14.05 billion, which slightly missed the consensus estimate of $14.09 billion and is an increase over sales of $9.295 billion from the same period last year. The company reported non-GAAP net income of $6.965 billion for the fourth quarter and cash from operations of $5.604 billion for the fourth quarter, less capital expenditures of $122 million, resulting in $5.482 billion of free cash flow. "Broadcom's fiscal year 2024 revenue grew 44% year-over-year to a record $51.6 billion, as infrastructure software revenue grew to $21.5 billion, on the successful integration of VMware," said Hock Tan, CEO of Broadcom Inc. "Semiconductor revenue was a record $30.1 billion driven by AI revenue of $12.2 billion. AI revenue which grew 220 percent year-on-year was driven by our leading AI XPUs and Ethernet networking portfolio," Tan added. Read More: 'Markets Have The Green Light To Rally' After November's 'Yawner' Inflation Report, Experts Say Outlook: Broadcom sees first-quarter revenue of approximately $14.6 billion, versus the $14.612 billion estimate. The company also issued adjusted EBITDA guidance of approximately 66 percent of projected revenue for the first quarter. AVGO Price Action: According to Benzinga Pro, Broadcom shares are up 5.27% after-hours at $190.54 at the time of publication Thursday. Read More: Robinhood Markets Grows Into 'Best-In-Class' Brokerage, Analyst Says Photo: Shutterstock Market News and Data brought to you by Benzinga APIs