According to Zhituo Finance APP, on Thursday after Post-Market Trading, Broadcom (AVGO.US) announced its fourth quarter performance for the 2024 fiscal year. Due to stronger-than-expected quarterly earnings and a forecast for a surge in demand for its AI Chips, Broadcom saw a nearly 16% increase in its stock price after trading on Thursday.

The Earnings Reports show that Broadcom's Q4 revenue was $14.054 billion, a 51% year-on-year increase, slightly lower than the market expectation of $14.08 billion. By segment, the Semiconductors Solutions segment reported revenue of $8.23 billion, a 12% year-on-year growth; the Infrastructure Software segment reported revenue of $5.824 billion, an impressive 196% year-on-year growth.

Under Non-GAAP accounting standards, net income was $6.995 billion, a 45% year-on-year increase; the adjusted EPS was $1.42, better than the market expectation of $1.38.

Looking ahead, Broadcom expects first quarter revenue for the 2025 fiscal year to be $14.6 billion, a 22% year-on-year growth, which is in line with market expectations; it forecasts that adjusted EBITDA will account for 66% of revenue in the first quarter.

In the Earnings Reports conference call, the company projected that AI product revenue in the first quarter of the 2025 fiscal year would grow by 65% year-on-year, far exceeding its overall semiconductor sales growth of about 10%. The company also predicted that by the 2027 fiscal year, the potential market size for AI components designed for Datacenter operators could reach as high as $90 billion. The company’s CEO Hock Tan emphasized during the conference call, "Opportunities for AI Chips are significant in the next three years."

Like NVIDIA, Broadcom is also a major beneficiary of the AI spending frenzy, attracting investors to Buy Broadcom’s Stocks. In the already completed 2024 fiscal year, Broadcom's AI revenue grew by 220% year-on-year to $12.2 billion, exceeding market expectations of over $10 billion, primarily due to its leading AI XPU and Ethernet networking product portfolio.

Datacenter operators rely on Broadcom's custom chips and networking chips to build their AI systems. The company also sells components for Autos, Smart Phones, and Internet Plus-Related access devices. Meanwhile, the company is entering the Software field, including products for mainframe computers, Cybersecurity, and Datacenter optimization.

Some analysts believe that as companies double down on investing in generative AI infrastructure, the demand for Broadcom's networking chips is also increasing, which help transmit the vast amounts of data used by AI applications like ChatGPT. Despite facing fierce competition from NVIDIA's Ethernet-type Infiniband products, Broadcom still benefits from the expansion of AI Datacenters as it is one of the largest providers of advanced networking equipment.

Hock Tan stated that his company has already won two new hyperscale customers - the largest Datacenter operators. Through a series of acquisitions, Hock Tan has built one of the most valuable companies in the Semiconductors Industry. The company's influence in the Industry also makes its forecasts a bellwether for demand across the entire Technology sector.

It is worth mentioning that there are reports suggesting that Apple (AAPL.US) will begin to roll out its self-developed wireless chips starting next year for new products to be released in 2025, including a shift from Broadcom’s supply to self-developed chips for chips in iPhone and home wireless devices. In response, Hock Tan stated during the Earnings Reports conference call that the company is in a multi-year commitment of cooperation with Apple. Hock Tan also indicated that Broadcom remains open to acquisitions, "This has been a core part of our company's Global Strategy and business model for the past decade."