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Broadcom’s Stock Soars 24% Pushing Market Cap Beyond $1 Trillion on Strong AI Growth

Broadcom Inc. shares jumped more than 24% on Friday, pushing the company’s market capitalization to $1 trillion for the first time in history. This came just after the firm released better-than-expected financials for the fourth quarter and a significant increase in revenue in the area of artificial intelligence. 

Broadcom reported that its fourth quarter revenues reached $14.05 billion and they were 51% higher compared to last year’s revenues during the same period. Revenue did not meet analysts’ expectations of $14.09 billion; however, revenue from the Semiconductor Solutions Group, which encompasses the company’s AI chips, increased by 12%, reaching $8.23 billion. This can be largely attributed to AI-related revenue growth of 220% over last year and for the entire year that hit $12.2 billion. CEO Hock Tan has further supported investor optimism through declaring that the company works with custom AI chips in behalf of large cloud customers and kept fueling the stock for a post-earnings rally. 

The company’s quarterly net income came in at $4.32 billion, or 90 cents per share, representing an increase of 23% from $3.52 billion, or 83 cents per share, earned during the same quarter last year. Earnings had surged following Broadcom’s success on semiconductor technology, which represents an area that has suddenly turned out to be more vital for the growth engine. 

Analysts have been becoming increasingly bullish on Broadcom’s prospects, especially in AI. Bernstein analysts raised the price target on the stock to $250 from $195, citing a promising outlook for AI. They said that management’s strategy for AI is starting to pay off with strong near-term and long-term growth potential. Bank of America analysts maintained their buy rating for Broadcom as the company remains one of the leaders in the design of custom chips for internal workloads. Meanwhile, analysts from Morgan Stanley underlined that AI strategy and its results will create more enduring interest, thereby placing Broadcom as one of the market leaders in AI semiconductors for at least a few years to come. With the company’s market cap now over $1 trillion, Broadcom’s strong performance underscores its growing role in the AI revolution and potential for continued growth in the high-demand sector.