Broadcom has been able to capitalize on the fever for artificial intelligence (AI). The chip supplier to Apple and other large companies in the industry managed to enter the club of trillion-dollar public companies, including giants such as Microsoft, TSMC and Nvidia, after the publication of results for the fiscal year ended November 3 and this exceeded market expectations. The company recorded revenues of 14,054 million dollars (approximately 13,300 million euros), which represents an increase of 51% compared to the same period of the previous year. Subsequently, it rose 24.4% on Wall Street – its biggest rally since March 2020 – and added 150 billion in a few hours to reach a price of $219.21 (208.99 euros) per share. The semiconductor giant has already achieved a revaluation of 101.11% this year.
The company also provided its outlook for 2025 and predicted that sales of AI products will increase 65% in the fiscal first quarter (ending February 2, 2025), much faster than the growth of its semiconductor production, which it is indeed about 10%.In fact, for the first quarter of fiscal 2025, Broadcom expects revenues of €13,912 million and an adjusted EBITDA of approximately 66% of forecast revenues. During a post-earnings conference call, Broadcom also predicted that the market for AI components designed for data centre operators could reach 85.743 billion euros by fiscal 2027.
AI’s revenues grew 220% during the year,driven by demand for processors and network components,according to its CEO,Hock Tan. The palo Alto (California)-based company had planned to obtain more than 9,535 million euros in annual revenue from AI.market; The figure finally reached 11,633 million euros in the last fiscal year, specifies the Bloomberg agency.
Tan has built one of the most valuable companies in the chip industry through a series of acquisitions, such as VMware, which he bought for 65.743 million euros in November 2023.”[Las adquisiciones] “They have been a key part of our strategy and business model for the last 10 years,” Tan said. The company has also developed a software unit that is approaching the size of its semiconductor business.Broadcom’s semiconductor division reported fourth-quarter revenue of 7,838 million euros, up 12% from the same period a year earlier, and software sales grew nearly 200%, to 5,543 million euros.
Broadcom’s fiscal results for fiscal 2024 showed record revenue of $51.6 billion, up 44% year over year. Annual adjusted EBITDA also hit a record $31.9 billion, up 37%, and free cash flow, excluding restructurings, was $21.9 billion. Based on these results, Broadcom increased its annual dividend to $2.36 per share for fiscal 2025, the 14th increase since 2011.
What are teh key strategies Broadcom is implementing to capture the growing AI semiconductor market?
Interview with Hock Tan, CEO of Broadcom: The Rise of AI and the Semiconductor Market
Editor, Time.news: Welcome,Hock Tan. Broadcom has made headlines for its impressive financial results, particularly in the artificial intelligence sector. Can you share how Broadcom capitalized on the demand for AI?
Hock Tan: Thank you for having me. the recent surge in demand for AI has been a significant driver for our growth. Our revenues from AI products grew an astounding 220% over the last year, reflecting the escalating need for processors and network components that power AI applications. By continually investing in research and advancement alongside strategic acquisitions, we’ve positioned ourselves to meet the industry’s needs effectively.
Editor, Time.news: It’s exciting to see such growth! Broadcom recently surpassed $14 billion in revenues.What factors contributed to this specific success in the fiscal year that ended on november 3?
Hock Tan: After reporting revenues of $14.054 billion, which is a 51% increase compared to the previous year, we can attribute this success to several factors. Firstly,our diversified portfolio of services,from semiconductor to software,has allowed us to harness the increasing demand across various sectors. Moreover, the acquisitions we’ve made over the past decade, like VMware, have strengthened our capabilities considerably in key areas related to AI and software solutions.
Editor, Time.news: Broadcom’s stock performance has also seen a remarkable rise. It jumped 24.4% on Wall Street following your earnings proclamation. what does this mean for the company moving forward?
Hock Tan: The strong stock performance underscores investor confidence in our strategy and growth trajectory. The $219.21 per share price is a reflection of the market’s optimism around our continued expansion, particularly in AI. With an anticipated revenue increase of 65% for AI products in the upcoming fiscal first quarter, we expect to maintain this momentum. This positivity not only reinforces our commitment to our stakeholders but also empowers us to invest further in innovation and technology.
Editor,Time.news: Looking ahead, you’ve projected that the market for AI components could reach €85.743 billion by fiscal 2027. How do you plan to capture a significant share of this market?
Hock Tan: Our strategy involves a mix of innovation and acquisition. We aim to keep expanding our product lines specifically designed for data center operators and to deepen our involvement in AI technology.By enhancing our semiconductor production capabilities and further developing our software division,we expect to offer thorough solutions tailored to the evolving demands of AI.
Editor, Time.news: Regarding your business model, you emphasize acquisitions.How do you foresee this contributing to Broadcom’s future?
Hock Tan: Acquisitions have been integral to our growth. They allow us to quickly expand our technological capabilities and market reach. For instance,acquiring VMware has been a game changer. It has enhanced our software portfolio, which is projected to rival our semiconductor revenues. We believe that thes synergistic acquisitions will continue to fortify our market position and deliver long-term value.
Editor, Time.news: Your recent fiscal results show impressive EBITDA growth as well. What practical advice do you have for other businesses looking to achieve similar financial success?
Hock Tan: Focus on diversifying your revenue streams and investing in innovation. It’s essential to stay ahead of market trends, particularly in fast-evolving sectors like AI. Building strong partnerships and exploring strategic acquisitions can also pave the way for significant growth. Most importantly, maintaining a robust financial discipline helps ensure sustainability and readiness to seize new opportunities when they arise.
Editor, Time.news: Thank you for sharing your insights, Hock.It’s evident that Broadcom is at the forefront of the semiconductor and AI revolution, and we look forward to seeing how your strategies unfold in the coming years!
Hock Tan: Thank you! We’re excited about the future and committed to delivering innovative solutions that meet the demands of our customers and the market.