Driven by a 220% growth in AI-related sales to $12.2 billion, Broadcom (AVGO, Financials) announced fiscal fourth-quarter revenue of $14.05 billion, a 51% year-over-year gain. Broadcom's stock jumped over 14% in extended trade after the disclosure.
Broadcom sees future growth driven mostly by its AI-related business. Forecasting a bright future for the AI business, CEO Hock Tan said it would reach between $60 billion and $90 billion by fiscal 2027. Custom-built accelerators and Ethernet networking solutions, which enable AI computer infrastructure, are the main contributions.
Versus the previous year's quarter, Broadcom's net income rose to $4.32 billion, or $0.90 per share from $3.52 billion, or $0.83 per share. Exceeding Wall Street projections, the business forecasts first-quarter income of $14.6 billion.
AVGO stock is up 97.5%, significantly outperforming the broader indices.
Strategically, Broadcom is working with Apple Inc. (AAPL, Financials) on the creation of an artificial intelligence server processor, internally nicknamed "Baltra." Aimed for mass manufacturing by 2026, this effort seeks to expand Broadcom's customer base and lower reliance on Nvidia Corp. (NVDA, Financials).
After acquiring VMware in November 2023 for $69 billion, Broadcom has reorganized VMware's sales and licensing approach. Although the modifications seek to simplify processes, they have caused some clients to investigate other suppliers, therefore indicating possible difficulties in keeping VMware's customer base.
