Broadcom shares rose 18 percent in pre-market trading on Wall Street after the chipmaker reported impressive gains in its artificial intelligence (AI) revenues. This development triggered a broad rally in the technology sector, with Nvidia also rising by 1.6 percent and futures on the Nasdaq Composite increasing by 0.8 percent.
Broadcom's AI sales in the fourth quarter of 2024 rose by 220 percent compared to the previous year, attracting analysts' interest. CEO Hock Tan described the potential for AI chips as "massive" and forecasted an addressable market volume between 60 and 90 billion US dollars by 2027, compared to less than 20 billion currently.
Our customers are planning long-term investments in AI, and that offers us a multi-year growth opportunity," said Tan. At the same time, he warned that the gains could fluctuate from quarter to quarter.
Broadcom shares, which have already risen by 62 percent this year, were trading at around 213 US dollars pre-market, potentially valuing the company over 140 billion US dollars. JPMorgan Chase raised the stock target price from 210 to 250 US dollars and predicted an annual AI revenue growth of 40 to 50 percent in the coming years.
In comparison, Nvidia, the leading provider of AI chips, rose by 180 percent this year. Analysts from Citigroup commented that "AI continues to be the driving force in the technology sector.
Leading AI companies like OpenAI are increasingly seeking alternatives to Nvidia's technology to diversify their supply chains. Broadcom's advancements in this area could challenge Nvidia's dominance and secure the company a significant market share in the long term.
