(Bloomberg) — Broadcom Inc., Apple Inc. and a chip supplier to other big tech companies, rallied in late trading after forecasting a boom in demand for its artificial intelligence chips.
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Sales of AI products will grow 65% in the fiscal first quarter, much faster than the overall semiconductor growth rate of about 10%, the company said during a post-earnings conference call. The chipmaker also predicts that the addressable market for AI components that it designs for data center operators will reach $90 billion by fiscal year 2027.
Like Nvidia Corp., Broadcom is positioning itself to be a big beneficiary of the AI spending boom. And Chief Executive Officer Hock Tan said his company had won two major new hyperscalar customers — the largest operators of data centers.
The stock rose nearly 14% in extended trading after the announcement. It had grown 62% by the end of 2024.
Investors have piled into Broadcom’s stock this year thanks to AI optimism. The Palo Alto, Calif.-based company predicted it would generate more than $10 billion in annual revenue from that market, outpacing other parts of its business. Ultimately, that number reached $12.2 billion in the last fiscal year.
AI revenue grew 220% during the year, driven by demand for processors and networking components, Tan said. Demand for non-AI chips, meanwhile, will decline in the first quarter. Sales will total $14.6 billion in the period, which runs through January, according to estimates.
Tan has amassed one of the most valuable companies in the chip industry through a series of acquisitions. He has also created a software unit that is approaching the scale of its semiconductor operations. This approach makes the company’s forecasts for demand across the technology industry ring true.
Profit in the fourth quarter was $1.42 per share, excluding certain items, the company said. Revenue rose to about $14.1 billion in the period ended Nov. 3. Analysts on average had expected earnings of $14.1 billion and earnings of $1.39 a share, according to data compiled by Bloomberg.
Data center providers rely on Broadcom’s custom-chip designs and networking semiconductors to build their AI systems. The company also sells components for cars, smartphones and Internet access gear. Meanwhile, its push into software includes products for mainframe computers, cybersecurity and data center optimization.
