A sign is posted in front of the Broadcom offices on December 12, 2024 in San Jose, California.
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shares Broadcom The company’s shares soared more than 21% on Friday morning, pushing the company’s market value past $1 trillion for the first time. If this move continues into the close, this will be Broadcom’s best trading day ever.
The move comes after the company reported fourth-quarter results that beat Wall Street profit expectations and showed strong growth in artificial intelligence revenue.
Broadcom reported fourth-quarter revenue of US$14.05 billion, an increase of 51% year-on-year, but lower than the US$14.09 billion expected by LSEG analysts. Revenue from Broadcom’s Semiconductor Solutions segment, which includes AI chips, rose 12% to $8.23 billion from $8.03 billion a year ago.
The company said its artificial intelligence revenue grew 220% this year to $12.2 billion. Broadcom shares rose in after-hours trading on Thursday after Chief Executive Hock Tan said the company was developing customized artificial intelligence chips with large cloud customers.
Broadcom’s net income was $4.32 billion, or 90 cents a share, up 23% from $3.52 billion, or 83 cents a share, a year earlier.
Bernstein analysts wrote in a note on Friday that Tan would likely look good in a leather jacket, a nod to the NVIDIA CEO Jen-Hsun Huang’s signature style. They said people were nervous ahead of Thursday’s results, but Broadcom’s fourth-quarter earnings were “good” and they were encouraged by management’s near- and long-term vision for artificial intelligence.
Analysts raised their price target on the stock to $250 from $195.
“Overall, the AI story really seems to be on track,” the analysts wrote.
Bank of America analysts reiterated a buy rating on the stock, citing in part its “surging artificial intelligence opportunities.” Broadcom currently dominates the market for custom chips for internal workloads, they said, but they warned there were some risks from “intense competition with NVDA in commercial chips and enterprise customers.”
Morgan Stanley analysts said Broadcom’s comments on artificial intelligence could increase long-term enthusiasm for the company, which they expect will continue to grow. Broadcom will remain “one of the most compelling ways to play artificial intelligence semifinals” over the next two to three years, they said.
“Overall, the quarter itself will provide relief from lower near-term expectations, while longer-term commentary around artificial intelligence will fuel enthusiasm for the long-term prospects of custom artificial intelligence chips – an enthusiasm that has already It reached a fever pitch.
—Michael Bloom and Kif Leswing contributed to this report
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