Broadcom shares exploded +24.43% this Friday, December 13, 2024, propelling the company into the exclusive club of companies with $1,000 billion in market capitalization.
This surge is due to a 220% increase in its AI-related revenue over the past year. Broadcom joins giants like Apple, Tesla and Microsoft, but it is time to rethink the nickname of the “Magnificent 7”.
From now on, the “BATMMAAN” (for Broadcom, Apple, Tesla, Microsoft, Meta, Amazon, Alphabet, Nvidia) dominate the market with a collective value of nearly $19 trillion.
Each of these companies, although different, are benefiting from the rise of AI. Meta, Alphabet, Apple, Microsoft and Tesla are integrating AI into their products, while Amazon, Nvidia and Broadcom are focusing on the hardware needed for this revolution, such as chips and data centers.
So this Friday, Broadcom has crossed the $1 trillion mark, thanks to optimistic predictions for the future. Its fourth-quarter revenue reached more than $14 billion, and the company expects $14.6 billion for the following quarter. Sales of AI products have jumped 220%, and CEO Hock Tan sees “massive” opportunities in the coming years, with a potential market of $60 billion to $90 billion by 2027.
Broadcom counts giants like Amazon and Google among its customers, which are increasing their computing capabilities for AI. Additionally, projects with OpenAI and Apple are expected to boost revenues by 2026. Broadcom’s semiconductors are essential in many industries, and demand for its AI XPU processors continues to grow.
Since the start of the year, Broadcom stock has climbed +100%, significantly outperforming the iShares Semiconductor index.
BofA Securities forecasts strong growth for Broadcom, with EPS reaching $11-$12 by 2027. The company remains a key player for Apple, despite competitive challenges.
Broadcom forecasts revenue of $14.6 billion for its fiscal first quarter. BofA raised its price target for the stock to $250, while maintaining its buy recommendation.
However, concerns remain about investor appetite for AI stocks and competition with Nvidia. I had the opportunity to write an analysis on the company Broadcom on July 18, 2022 in which I expressed my optimism for the future. The stock has gained +362% since then. Happy are the shareholders!
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