Broadcom announced better-than-expected fourth-quarter earnings on Thursday, reporting that its artificial intelligence revenue more than tripled over the past year. Following the announcement, the chipmaker’s stock surged, rising 13% in extended trading after CEO Hock Tan highlighted the development of custom AI chips for three major cloud customers.
Key Financial Metrics
For the quarter ending November 3, Broadcom’s performance compared to LSEG consensus estimates was as follows:
- Earnings per Share: $1.42 (adjusted) vs. $1.38 expected
- Revenue: $14.05 billion vs. $14.09 billion expected
Broadcom projected first-quarter revenue of approximately $14.6 billion, slightly below the average analyst estimate of $14.57 billion. Year-over-year revenue for the fourth quarter increased by 51%, rising from $9.3 billion in the same period last year.
Quarterly Highlights
- Net Income: $4.32 billion, or 90 cents per share, up 23% from $3.52 billion, or 83 cents per share, in the same quarter last year.
- Semiconductor Solutions Group Revenue: Increased 12% to $8.23 billion from $8.03 billion a year ago, driven by demand for AI chips.
Broadcom reported a staggering 220% increase in AI revenue for the year, totaling $12.2 billion. This growth is partly attributed to ethernet networking components that connect thousands of AI chips.
Future Outlook
During the earnings call, Tan expressed optimism about the future of AI, stating, “We see an opportunity over the next three years in AI.” He noted that major hyperscale companies have commenced their journeys to develop custom AI accelerators. Broadcom is actively collaborating with three large customers, each expected to deploy 1 million AI chips in networked clusters by 2027. The total market opportunity for Broadcom’s AI chips, referred to as XPUs, along with AI networking components, is projected to range between $60 billion and $90 billion by 2027.
Infrastructure Software Division
Broadcom’s infrastructure software division reported revenues of $5.82 billion for the quarter, nearly tripling from $1.96 billion a year earlier, largely due to the $69 billion acquisition of VMware, completed after the previous year’s quarter.
Dividend Increase
In a positive move for shareholders, Broadcom announced an 11% increase in its quarterly dividend for fiscal 2025, raising it to 59 cents per share.
Overall, Broadcom’s robust earnings and strategic focus on AI position the company well for continued growth in an expanding market.
