Broadcom (NASDAQ:AVGO) saw its stock surge over 17% in pre-market trading Friday after delivering robust revenue guidance and forecasting explosive demand for its custom AI chips in the years ahead. The positive outlook underscored the chipmaker’s dominant position in the AI market and fueled investor enthusiasm.
For the quarter, Broadcom reported earnings per share of $1.42 on revenue of $14.05 billion. While earnings slightly surpassed analyst expectations of $1.39 per share, revenue came in marginally below the anticipated $14.07 billion. The company’s semiconductor solutions segment, its primary revenue driver, grew 12% year-over-year to $8.23 billion, while infrastructure software revenue skyrocketed 196% to $5.82 billion.
Broadcom achieved record-breaking semiconductor revenue of $30.1 billion for fiscal 2024, driven by $12.2 billion in AI-related sales. This represented a staggering 220% year-over-year growth in AI revenue, attributed to the company’s advanced AI XPUs and Ethernet networking solutions.
Looking ahead, Broadcom projected first-quarter revenue of $14.6 billion, exceeding Wall Street’s consensus estimate of $14.55 billion. However, the most significant insight from the earnings call was management’s increasing confidence in the AI market’s potential. According to projections, the Serviceable Addressable Market (SAM) for Broadcom’s three primary AI ASIC customers could reach $60–90 billion by fiscal 2027. This estimate hinges on all three customers transitioning from GPUs to ASICs for training clusters, with the potential for further expansion if Broadcom secures additional hyperscale clients.
Jefferies analysts highlighted the near-term clarity in AI revenue and the long-term growth potential of Broadcom’s xPU clusters as key factors driving investor interest. Following the earnings announcement, Jefferies raised its price target for Broadcom shares from $205 to $225, reflecting optimism about the company’s positioning in the rapidly growing AI sector.