Broadcom (AVGO) Stock Is Soaring, What You Need to Know

Shares of fabled chip and software maker Broadcom (NASDAQ:AVGO) rose 21.3% in the morning session after the company posted strong third-quarter (FQ4 2024) results, with revenue and earnings per share exceeding expectations of Wall Street. Revenue increased 51% compared to the previous year, thanks to strong contributions from VMWare. Given strong revenue growth, operating margins increased to 63%, although semiconductor gross margins declined slightly due to a higher mix of AI-driven products. AI emerged as a key part of Broadcom’s strategy, generating $3.7 billion in revenue during the quarter – up 150% year over year – and representing a substantial portion of semiconductor sales. This highlights the company’s growing reliance on AI technologies as an engine for future growth.

Looking ahead, Broadcom’s guidance for the first quarter of 2025 implied 22% year-over-year revenue growth, driven by the continued strength of demand for AI semiconductors. This is expected to deliver an adjusted EBITDA margin of 66%. Overall, this was a strong quarter for Broadcom, demonstrating Broadcom’s prowess in AI.

Shares ended the day at $224.81, up 24.3% from the previous close.

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Broadcom’s stock is highly volatile, having seen 22 moves of more than 5% in the past year. But such big moves are rare even for Broadcom and indicate that this news has significantly affected the market’s perception of the company.

The previous big move we wrote about was two days ago, when shares gained 5.5% on news that reports showed the company is working with Apple, the maker of the iPhone, to make its first server chip dedicated to designed for artificial intelligence tasks. The news highlights the growing trend of tech giants switching to in-house chip production. It also showcases Broadcom’s expertise in AI chip design, potentially drawing more attention to the company alongside rivals like Nvidia and AMD.

Broadcom is up 107% since the start of the year, hitting a new 52-week high at $224.49 per share. Investors who bought $1,000 worth of Broadcom stock five years ago would now be looking at an investment worth $7,117.

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