Broadcom shares jump after chipmaker expects AI sales to rise

(Bloomberg) — Broadcom Inc., a chip supplier to Apple Inc., rose. And other major technology companies, in late trading after anticipating a boom in demand for their artificial intelligence chips.

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Sales of artificial intelligence products will increase 65% in the fiscal first quarter, much faster than semiconductors’ overall growth of about 10%, the company said during a post-earnings conference call. The chipmaker also predicted that the addressable market for the AI ​​components it designs for data center operators will reach $90 billion by fiscal 2027.

Like Nvidia Corp, Broadcom is positioning itself to be a major beneficiary of the AI ​​spending frenzy. CEO Hock Tan said his company has won two major new customers for hyperscalers – the largest data center operators.

The stock rose about 14% in extended trading after the announcement. It was up 62% in 2024 until the close.

Investors have piled into Broadcom shares this year, drawn by the optimism of artificial intelligence. The Palo Alto, California-based company expects it will generate more than $10 billion in annual revenue from this market, outpacing other parts of its business. Ultimately, the number reached $12.2 billion in the last fiscal year.

AI revenues grew 220% during the year, driven by demand for processors and networking components, Tan said. Meanwhile, demand for non-AI-related chips will decline in the first quarter. Total sales are expected to reach $14.6 billion in this period, which lasts through January, in line with estimates.

Tan has assembled one of the most valuable companies in the chip industry through a series of acquisitions. It has also built a software unit that is close to the size of its semiconductor operations. This range makes the company’s forecasts a leader for broad demand from the technology industry.

The company said profit was $1.42 per share in the fourth quarter, excluding some items. Revenue rose to nearly $14.1 billion in the period ending November 3. Analysts estimated $1.39 a share in earnings and revenue of $14.1 billion on average, according to data compiled by Bloomberg.

Data center providers rely on Broadcom’s custom chip design and networking semiconductors to build their AI systems. The company also sells components for cars, smartphones and Internet access equipment. Meanwhile, its software orientation includes products for mainframe, cybersecurity and data center optimization.

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