Broadcom Hits $1 Trillion Market Cap on Q4 Results and Massive AI Growth Outlook

Broadcom has surged to an all-time high, eclipsing a $1 trillion market capitalization for the first time following its fourth-quarter earnings report. The semiconductor giant's modest earnings beat and solid guidance were complemented by bullish commentary on its AI business, which appears to be the primary driver of investor enthusiasm.

For the quarter, Broadcom reported revenue growth of 51.2 percent year-over-year to $14.05 billion, aligning with expectations, and guided first-quarter revenue to approximately $14.6 billion, slightly above consensus. The company also announced an 11 percent increase in its quarterly dividend to $0.59 per share, reflecting confidence in its long-term growth prospects.

The standout performance came from Broadcom's AI-driven semiconductor business, which posted a remarkable 150 percent year-over-year increase in revenue to $3.7 billion.

This growth highlights Broadcom's dominant position in supplying advanced AI networking and processing technologies to hyperscale customers. Networking revenue, the company’s largest chip segment, jumped 45 percent year-over-year to $4.5 billion, with AI-related networking accounting for 76 percent of that total.

Broadcom is capitalizing on its proprietary AI XPU chips, which saw shipments double during the quarter. Looking ahead, the company plans to deliver its next-generation 3-nanometer XPUs to hyperscale customers in the second half of fiscal 2025, further strengthening its leadership in this rapidly expanding market.

While Broadcom’s non-AI semiconductor revenue declined 23 percent year-over-year, there are signs of recovery, with revenue up 10 percent from its trough six months ago. Wireless revenue, driven by seasonal demand from a North American customer presumed to be Apple, increased 30 percent sequentially to $2.2 billion.

Broadcom's comments about ongoing collaboration with this key customer, potentially extending to AI chips, helped reassure investors amid concerns about Apple's reported plans to develop its own chips.

Broadcom’s management offered a bold vision for the future of its semiconductor business, particularly in AI. By 2027, the company expects each of its three major hyperscale customers to deploy 1 million AI XPU clusters across a single fabric, representing a $60 to $90 billion addressable market. Broadcom sees itself as a leading player in this space, with significant market share potential.

Beyond AI, Broadcom’s other segments showed mixed performance. Server storage revenue has rebounded 20 percent from its recent lows, while broadband, though down 51 percent year-over-year, is expected to recover beginning in the first quarter of fiscal 2025. Industrial applications, a smaller contributor to revenue, are also forecast to recover in the second half of fiscal 2025.

Overall, Broadcom’s results and guidance were solid, but it is the company’s optimism surrounding its AI business that has driven shares higher. With a massive opportunity in AI and strategic partnerships with major customers, Broadcom appears well-positioned to capitalize on a transformative shift in the semiconductor industry.

The stock's surge to a $1 trillion market cap underscores investor confidence in its ability to deliver long-term growth in this rapidly evolving market.