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Broadcom Inc., a leading chip supplier for Apple Inc. and other tech giants, achieved a milestone by reaching a $1 trillion market valuation for the first time on Friday. The surge was fueled by optimism surrounding its artificial intelligence (AI) chips and an impressive stock rally.
The company’s stock skyrocketed by 24% to $224.80 in New York, marking its largest one-day share price increase since August 2009, when its predecessor, Avago Technologies Ltd., held its initial public offering. Broadcom’s recent growth comes in part from its 2016 merger with Broadcom Corp., solidifying its current market position.
AI Growth Drives Broadcom’s Success
Broadcom has predicted a 65% surge in sales of its AI products for the first fiscal quarter, significantly outpacing its overall semiconductor growth rate of 10%. By fiscal 2027, the company estimates the AI component market for data center operators could reach $90 billion. In the past fiscal year, Broadcom reported AI revenue growth of 220%, driven by increasing demand for processors and networking components.
Broadcom CEO Hock Tan revealed that the company recently secured two major hyperscaler customers—key players in the data center market. Tan also highlighted the company’s projection of generating over $10 billion annually from the AI sector, surpassing previous expectations.
Q4 Financial Highlights
For the fourth quarter, which ended November 3, Broadcom reported:
- Revenue: $14.1 billion, aligning with analysts’ estimates.
- Profit: $1.42 per share (excluding some items), exceeding the average analyst forecast of $1.39 per share.
- Semiconductor Revenue: $8.23 billion, a 12% increase.
- Software Revenue: Grew nearly 200% to $5.82 billion, partly due to its $69 billion acquisition of VMware Inc.
Broadcom’s Role in the AI Frenzy
Broadcom’s components play a critical role in building AI systems for data centers. The company also provides chips for cars, smartphones, and internet access gear. Additionally, it has expanded into the software sector, offering products for cybersecurity, mainframe computing, and data center optimization.
Apple Relationship and Future Challenges
Apple Inc. remains Broadcom’s largest customer, relying on the company for iPhone components. However, Apple is reportedly developing in-house versions of certain wireless chips, which could impact Broadcom and other suppliers like Qualcomm Inc. Tan emphasized Broadcom’s continued collaboration with Apple on multi-year technology roadmaps.
Despite the competition, Broadcom remains open to acquisitions, a strategy that has been integral to its growth over the past decade.
With its record-breaking valuation and strong foothold in the AI market, Broadcom is poised to remain a major player in the evolving tech landscape.
Sources By Agencies
