Broadcom's Stock Price Surges 24% Post Earnings, Market Cap Hits $1 Trillion

On December 13th, Broadcom released its financial report for the fourth fiscal quarter and the fiscal year 2024.

Driven by the booming demand for artificial intelligence (AI), Broadcom's performance for the current quarter and its guidance for the next quarter basically met expectations.

Both the total revenue and adjusted profit in the fiscal year 2024 hit record highs. In particular, the revenue from AI skyrocketed by 220% year-on-year throughout the fiscal year.

Subsequently, Broadcom's stock price surged by 24%, and its market capitalization climbed to $1 trillion, setting a new historical high.

After that, investors in the market began to wonder whether it was time to invest in AI again. Don't rush. Now let's take a look at this new trillion-dollar giant.

The revenues from AI and semiconductors have increased significantly

It's not difficult to find from the financial report that Broadcom continued its strong growth momentum in the fourth quarter of the fiscal year 2024.

The company's revenue in 2024 increased by 51% year-on-year to $140.54 billion, compared with the expected $140.8 billion. Its net profit was $43.24 billion, a significant increase. It is estimated that the revenue for the first fiscal quarter of 2025 will be approximately $146 billion, a 22% year-on-year increase, while analysts' expectation is $146.1 billion.

The revenue and net profit are fairly in line with expectations. The key lies in the following two data points.

In the fiscal year 2024, the revenue increased by 44% year-on-year to a record high of $516 billion. The AI revenue grew by 220% year-on-year throughout the fiscal year to reach $122 billion, driving the revenue of the semiconductor business to a new high of $301 billion. The adjusted EBITDA increased by 37% year-on-year to a record high of $319 billion.

The reason why the market reacted so strongly to this financial report is that Broadcom has shown that its AI and semiconductor businesses have been put into practice and are able to make money.

Broadcom's CEO, Hock Tan, also emphasized that "there will be significant opportunities for AI chips in the next three years" and predicted that the company's "AI semiconductor business (in terms of revenue) will surpass other businesses."

Meanwhile, he also predicted that the market demand for customized AI chips will range from $60 billion to $90 billion by 2027. Moreover, in the field of AI chips, Broadcom has two additional super (computing) customers, and it is expected that these new customers will bring in revenue before 2027.

This undoubtedly drove investors crazy. The growth rate of AI will be unimaginably fast. I also have to sigh that the US stock market is a market where performance reigns supreme.

After the sharp rise, is it still worth buying?

The following is the question that everyone cares about the most. Since it has already risen so much, is it still advisable to buy in?

Before discussing this issue, let's first talk about Nvidia.

Last Friday, when Broadcom's stock price soared, Nvidia's stock price dropped by 2.3%. Wall Street is paying attention to the demand of large technology companies for ASICs (Application-Specific Integrated Circuits), which may be one of the reasons for the decline in Nvidia's stock price.

Custom chips are quickly taking market share from GPUs every year, so Broadcom and Nvidia have formed a seesaw relationship.

In addition, Nvidia's current stock price is really too high, so some investors are likely to choose to sell Nvidia stocks in the short term and turn to Broadcom instead. I think this is quite possible.

Moreover, Broadcom's performance guidance is actually beneficial to all artificial intelligence semiconductor and networking companies.

From a technical perspective, due to the sharp rise on Friday, all of Broadcom's short-term resistance levels have been broken through.

Currently, with the US stock index constantly hitting new highs and this bull market in US stocks being a tech-driven bull market, the room for growth is actually unlimited. So even though it has already risen a lot, I think there are still certain investment opportunities for Broadcom's stock.