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Broadcom shares soared 20 per cent in Wall Street trading, sending its market value to $1tn after the chipmaker posted huge gains in artificial intelligence revenues and projected “massive” growth in the field.
The sharp rally in shares of the US-based group came after it said late on Thursday that its AI revenues surged 220 per cent in its 2024 fiscal year.
“We see our opportunity over the next three years in AI as massive,” Hock Tan, its chief executive, told analysts, discussing the investing plans of its biggest customers. “For each of them, this represents a multiyear, not a quarter-to-quarter journey.”
The gains for Broadcom come at the end of a blockbuster year for companies that are tapping into the booming demand for high-end chips to power the fast-growing AI industry. Broadcom’s shares have risen about 90 per cent in 2024, behind industry leader Nvidia, which has gained 180 per cent.
Tan estimated that the addressable AI market for Broadcom by 2027 would be between $60bn and $90bn, from less than $20bn currently.
“We are very well positioned to achieve a leading market share in this opportunity,” Tan added, though he warned the gains would not be linear but vary each quarter.
Analysts at JPMorgan Chase raised their price target for the stock to $250 from $210, adding: “Even applying a more conservative market share assumption, we can see Broadcom’s AI business growing at a 40-50 per cent-plus revenue (compound annual rate) over the next several years.” The shares traded at $218 on Friday.
Leading AI companies such as OpenAI have been seeking ways to reduce their reliance on Nvidia’s cutting-edge technology and deepen their supply chains. “AI is still driving the bus,” said analysts at Citigroup.
Broadcom’s rise on Thursday also boosted the broader market, with the tech-focused Nasdaq Composite climbing 0.6 per cent.
