Broadcom Inc., a company that makes chips for many technology businesses, including Apple, reached a market value of $1 trillion for the first time last Friday. This happened after the company forecasted a big increase in demand for its artificial intelligence (AI) chips. Broadcom expects sales of its AI products to jump by 65% in the first three months of this year, which is much higher than its overall growth in chips of 10%.
By the year 2027, Broadcom believes that the market for AI components it designs could reach $90 billion. Broadcom’s stock price rose by 24% to $224.80, marking its biggest one-day price increase since 2009.
Similar to Nvidia, Broadcom is becoming a key player in the growing AI market. CEO Hock Tan announced that the company secured two big new customers that run huge data centers. Investors have been excited about Broadcom’s stock this year, attracted by the potential of AI.
The company is based in Palo Alto, California, and it predicts it will make over $10 billion from AI products, even more than from other types of business. Last year, this number was about $12.2 billion. The demand for AI chips has surged, growing by 220% in the past year.
Broadcom says it expects total sales to be $14.6 billion this quarter, matching predictions. The company reported that its profit was $1.42 per share in the last quarter, with nearly $14.1 billion in revenue.
Data centers rely on Broadcom’s custom-designed chips for their AI systems. The company also sells components for cars, smartphones, and internet devices. Recently, it has expanded into software, offering products for cyber security and data center management.
In the last quarter, Broadcom’s chips earned $8.23 billion, which was a 12% increase. Software sales surprisingly grew nearly 200% to $5.82 billion. Broadcom has become much larger since 2023, partly because it bought VMware for around $69 billion.
Apple is Broadcom’s top client, as the company provides parts for iPhones. However, reports suggest that Apple will start using its own chip instead of Broadcom’s next year, which could also affect Qualcomm. Yet, Tan confirmed that Broadcom will remain closely linked with Apple for future projects and is open to more acquisitions.
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