Broadcom on the Rise: AI Potential Boosts Quarterly Results

Thanks to remarkable performance in the fourth quarter of the fiscal year 2024, Broadcom has exceeded Wall Street's expectations. With an impressive revenue growth of 51% compared to the previous year, the stock price of the chip and software manufacturer surged by 21.3% in early trading. This growth was mainly driven by contributions from VMWare. The operating margin rose to 63%, although the gross margin in the semiconductor sector slightly declined due to a higher proportion of AI-driven products. Notably, the role of Artificial Intelligence is outstanding: it generated $3.7 billion in revenue for the quarter—a 150% increase compared to the previous year—underscoring the strategic focus and reliance on AI technology. The outlook for the first quarter of 2025 is also optimistic: a 22% revenue growth compared to the previous year is expected, due to the ongoing high demand for AI semiconductors. An adjusted EBITDA margin of 66% is also forecasted. This once again demonstrates Broadcom's expertise in the AI field. On the trading day, the stock closed at $224.81, representing an increase of 24.3% compared to the previous day. Such strong movements are rare even for Broadcom and underscore the company's significant market perception. Just two days ago, a 5.5% gain was recorded. The reason was the announcement of a collaboration with Apple to develop a first server chip for AI tasks. This highlights the trend of major tech companies towards internal chip production and could bring Broadcom further into the spotlight alongside competitors such as Nvidia and AMD. Since the beginning of the year, Broadcom's stock has increased by 107%, reaching a new 52-week high of $224.49. Someone who invested $1,000 in Broadcom five years ago now sees a return of $7,117. Finally, StockStory points to the opportunities of thematic investing, where successes like Microsoft and Alphabet shape the trends. Against this backdrop, we have identified a profitable growth value that benefits from the AI revolution and are now offering this insight for free.