(Bloomberg) — Broadcom Inc., a chip supplier to Apple Inc. and other major tech companies, rose to a market value of $1 trillion for the first time after predicting huge demand for its artificial intelligence chips.
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Sales of AI products will rise 65% in the first fiscal quarter, far faster than overall semiconductor growth of about 10%, the company said on a post-earnings conference call. The chipmaker also predicted that the addressable market for AI components it designs for data center operators would be as much as $90 billion in fiscal 2027.
Just like Nvidia Corp. Broadcom is positioning itself as a major beneficiary of the raging AI spending. And Chief Executive Officer Hock Tan said his company had won two major new hyperscaler customers – the largest data center operators.
The stock rose as much as 21% to $218.29 after markets opened in New York on Friday, the biggest rally since March 2020.
Investors have piled into Broadcom stock this year, lured by AI optimism. The Palo Alto, California-based company had forecast it would generate more than $10 billion in annual revenue from that market, surpassing other parts of its business. Ultimately, this number reached $12.2 billion last fiscal year.
AI revenues rose 220% over the year, fueled by demand for processors and networking components, Tan said. Demand for non-AI chips will decline in the first quarter. Total sales will reach $14.6 billion through January, in line with estimates.
Tan has assembled one of the most valuable companies in the chip industry through a series of acquisitions. He has also built a software unit that approximates the size of its semiconductor business. That reach makes the company’s forecasts a gauge of demand across a broad swath of the technology industry.
Fourth-quarter earnings were $1.42 per share, excluding some items, the company said. Revenue rose to nearly $14.1 billion in the period ending Nov. 3. Analysts had estimated a profit share of $1.39 and revenue of an average of $14.1 billion, based on data compiled by Bloomberg.
Data center providers rely on Broadcom’s custom chip design and network semiconductors to build their AI systems. The company also sells parts for cars, smartphones and Internet access equipment. The company’s emphasis on software, meanwhile, includes products for mainframe computers, cybersecurity and data center optimization.
