Broadcom Stock Rises 25%, Reaches $1 Trillion Market Cap on AI Growth

Broadcom Inc. (AVGO, Financials) reported a 51% year-over-year revenue increase for its fiscal fourth quarter, driven by robust expansion of its artificial intelligence business. By fiscal 2027, the company estimates its artificial intelligence-related revenue could reach $50 billion per year. Aside from the outstanding results that significantly exceeded analysts’ estimates, AVGO also announced forecasts that were positively received by the stock market and drove the stock higher; last changed hands for $224.66.

Broadcom posted revenue of $14.05 billion in the quarter, driven primarily by its AI division, a notable year-over-year increase. According to the company, artificial intelligence-related revenue increased 220% to $12.2 billion in fiscal 2024.

CEO Hock Tan highlighted Broadcom’s artificial intelligence ambitions and speculated that the AI ​​accelerator market could reach $60 billion to $90 billion by fiscal 2027. This enables Broadcom to capitalize on the increased demand for next-generation chipsets and infrastructure solutions, thereby driving the development of the artificial intelligence sector.

The strong earnings release triggered a surge in Broadcom’s stock price of over 20%, pushing the company’s market value to over $1 trillion. Broadcom is among a small handful of U.S. companies to achieve this figure, including Apple (AAPL, Financials) and Nvidia (NVDA, Financials).

Analysts made positive changes to Broadcom’s price estimates following the earnings release. While maintaining a Buy rating, Citi changed its price target from $205 to $220; Bank of America raised its estimate from $215 to $250. What’s particularly positive is that Mizuho analysts have set a price target of $245 and forecast AI sales could exceed $50 billion by fiscal year 2027.

This article first appeared on GuruFocus.