A banner hangs in front of Broadcom's office in San Jose, California, on December 12, 2024.
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shares Broadcom It jumped more than 21% on Friday morning, pushing the company's market value past $1 trillion for the first time. This will be Broadcom's best trading day on record if this move continues until the closing bell.
This move comes after the company informed Fourth quarter results Which beat Wall Street's earnings expectations and showed strong AI revenue growth.
Broadcom reported revenue of $14.05 billion for the fourth quarter, up 51% year over year but below the $14.09 billion that analysts had expected according to LSEG. In Broadcom's semiconductor solutions group, which includes its AI chips, revenue increased 12% to $8.23 billion from $8.03 billion last year.
The company said that artificial intelligence revenues jumped 220% for the year to reach $12.2 billion. The stock rose in after-hours trading on Thursday when Broadcom CEO Hock Tan said the company was developing custom AI chips with large cloud customers.
Broadcom's net income was $4.32 billion, or 90 cents per share, up 23% from $3.52 billion, or 83 cents per share, in the same quarter a year earlier.
A tan might look good in a leather jacket, Bernstein analysts wrote in a note on Friday Nvidia CEO Jensen Huang's signature style. They said there was a lot of nervousness ahead of Thursday's results, but Broadcom's fourth-quarter earnings were “decent” and they were encouraged by management's near- and long-term vision for artificial intelligence.
Analysts raised their price target on the stock to $250 from $195.
“Overall, the AI story appears to be starting to come into its own,” the analysts wrote.
Analysts at Bank of America reiterated their buy rating on the stock, in part due to the “growing AI opportunity.” They said Broadcom currently dominates the market for chips for internal workloads, but warned there was some risk from “intense competition against NVDA's stronghold in commercial and enterprise silicon customers.”
Morgan Stanley analysts said Broadcom's comment about artificial intelligence is likely to increase long-term enthusiasm around the company, which they expect to continue to build. They said Broadcom remains “one of the most compelling ways to play the AI semifinals” over the next two to three years.
“Overall, the quarter itself will provide relief against lower near-term expectations, and longer-term commentary on AI will spark enthusiasm for the prospects of custom AI chips over the longer term — enthusiasm that was already at its peak,” the note Friday.
— CNBC's Michael Bloom and Kev Lesswing contributed to this report.
