Broadcom enters the trillion-dollar club on AI strength

Shares in the semiconductor giant Broadcom (Nasdaq: AVGO) are urging in early market trading this morning after the company announced its Q4 2024 earnings, in which it revealed that its AI revenue skyrocketed 220%. At the time of this writing, AVGO shares are up over 20%, and with their rise, Broadcom is now the latest tech giant to surpass a trillion-dollar market cap. Here’s what you need to know.

Broadcom’s Q4 2024 results

What’s interesting about Broadcom’s Q4 results—especially with today’s stock surge—is that the company didn’t have a blowout quarter beyond all expectations. As a matter of fact, when it came to revenue, Broadcom actually produced less than many analysts expected for the quarter. Here are Broadcom’s most salient Q4 metrics:

• Total Revenue: $14.05 billion (up 51% from the same period a year earlier) Semiconductor solutions revenue: $8.2 billion Infrastructure software revenue: $5.8 billion
• Net income: $4.3 billion
• GAAP diluted EPS: 90 cents

• Semiconductor solutions revenue: $8.2 billion
• Infrastructure software revenue: $5.8 billion

While the 51% growth in total revenue to $14.05 billion is nothing to sneeze at, it did come in slightly below the expectations of many analysts. CNBC reports that LSEG analysts were expecting $14.09 billion in revenue.

So why is the stock surging today if revenue missed analyst expectations? It all comes down to AI.

Broadcom’s AI business seems to be going very well

With Q4 being the last quarter in the company’s fiscal year, Broadcom also announced its final 2024 numbers, in which the company revealed one metric that seems to have excited investors: Its revenue from its AI product grew 220% year-on-year.

As Broadcom CEO Hock Tan stated in the company’s Q4 press release, “Semiconductor revenue was a record $30.1 billion driven by AI revenue of $12.2 billion. AI revenue, which grew 220 percent year-on-year was driven by our leading AI XPUs and Ethernet networking portfolio.”

While Nvidia has been the AI chip leader for the past few years, Broadcom also offers its own AI semiconductors. Recently, Broadcom has started making deals with some very powerful tech companies. In October, Reuters reported that OpenAI was tapping Broadcom to make AI chips. Then, just this week, The Information reported that Broadcom was working with Apple to develop the company’s first AI server chip.

The revelation that Broadcom’s AI product revenue grew 220% YOY, combined with these recent reports, seems to have reinvigorated investor interest in the company’s stock.

Broadcom becomes the latest trillion-dollar tech giant

That investor interest, which is sending AVGO shares surging this morning, is also sending Broadcom’s valuation past a psychologically important threshold: a trillion-dollar market cap.

AVGO’s current stock price—around $218 per share at the time of this writing—now gives Broadcom a market cap of around $1.03 trillion. That means Broadcom now joins the ranks of the few American companies who are also in that exclusive club, including Apple, Microsoft, Meta, Google, Nvidia, and Amazon.

Today’s stock surge puts Broadcom at an all-time stock price high. Year-to-date, the company’s stock price has surged over 94%.