The long-established list of companies with capitalizations of more than $1 trillion added a newcomer yesterday in the form of Broadcom, whose stock price jumped 24% yesterday after the publication of quarterly earnings and despite rumors about Apple’s intentions to stop using its components in its products.
Image source: Broadcom
In fact, as CNBC notes, last Friday marked Broadcom’s best stock market day in the company’s history, with the stock price up more than 24% in yesterday’s session. The quarter’s results exceeded analysts’ expectations, demonstrating a strong increase in revenue in the segment of components for artificial intelligence systems. The company’s total revenue increased by 51% year-on-year to $14.05 billion and even fell slightly short of the projected value, but in general, in the AI business, the company’s revenue at the end of the fiscal year grew by 220% to $12.2 billion, according to management. Quarterly revenue in the semiconductor solutions segment increased by only 12% year-over-year to $8.23 billion.
Positive dynamics for Broadcom shares was added by the statement of the head of the company, Hock Tan, about the development of a chip for AI systems customized by large cloud clients. The company’s net profit in the fourth segment increased by 23% to $4.32 billion. Analysts recommended Broadcom shares to buy, explaining this recommendation by the company’s ability to increase its revenue in the field of components for AI systems. However, competition from Nvidia poses a certain threat to Broadcom’s business expansion in this area. The potential of the latter in the AI segment, according to representatives of Morgan Stanley, will most actively develop in the next two or three years.