An indication is posted in entrance of a Broadcom workplace on December 12, 2024 in San Jose, California.
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Shares of Broadcom popped greater than 21% Friday morning, pushing the corporate’s market cap past $1 trillion for the primary time. It’ll be Broadcom’s greatest buying and selling day on document if the transfer holds till the closing bell.
The transfer comes after the corporate reported fourth-quarter outcomes that beat Wall Street’s expectations for earnings and confirmed sturdy synthetic intelligence income progress.
Broadcom reported $14.05 billion in income for the fourth quarter, up 51% yr over yr however shy of the $14.09 billion anticipated by analysts in keeping with LSEG. In Broadcom’s semiconductor options group, which incorporates its AI chips, income elevated 12% to $8.23 billion from $8.03 billion a yr in the past.
The firm mentioned AI income jumped 220% for the yr to $12.2 billion. The inventory popped in after-hours buying and selling Thursday when Broadcom CEO Hock Tan mentioned the corporate is creating customized AI chips with giant cloud prospects.
Broadcom’s web earnings got here in at $4.32 billion, or 90 cents per share, up 23% from $3.52 billion, or 83 cents per share, in the identical quarter a yr earlier.
Bernstein analysts wrote in a Friday notice that Tan would possibly look good in a leather-based jacket, a nod to Nvidia CEO Jensen Huang’s signature fashion. They mentioned there have been quite a lot of nerves forward of Thursday’s outcomes, however Broadcom’s fourth-quarter earnings have been “first rate” and so they have been inspired by administration’s near-term and longer-term imaginative and prescient for AI.
The analysts raised their value goal on the inventory to $250 from $195.
“Overall the AI story appears to essentially be coming into its personal,” the analysts wrote.
Analysts at Bank of America reiterated their purchase ranking on the inventory, partly due to its “surging AI alternative.” They mentioned Broadcom presently dominates the marketplace for customized chips for inner workloads, however they cautioned that there’s some danger from the “stiff competitors towards NVDA’s stronghold in service provider silicon and enterprise prospects.”
Morgan Stanley analysts mentioned Broadcom’s commentary round AI will seemingly add to long-term enthusiasm across the firm, which they count on will proceed to construct. They mentioned Broadcom stays “one of the vital compelling methods to play AI semis” over the following two to a few years.
“Overall, the quarter itself will present a reduction vs. low nearer time period expectations, and the long run commentary round AI will stoke enthusiasm for customized AI chip long run prospects – enthusiasm that was already at a fever pitch,” the analysts wrote in a Friday notice.
— Michael Bloom and Kif Leswing contributed to this report
