Broadcom Enters Trillion-Dollar Valuation Club Amid AI Chip Surge
Broadcom joined the elite trillion-dollar valuation club on December 13, 2024, as its stock surged by 24% in the wake of stellar earnings and promising AI chip forecasts. This achievement marks Broadcom as the eighth U.S. tech company and the 12th company worldwide to reach this prestigious milestone.
CEO Hock Tan announced that Broadcom’s AI revenue saw a massive 220% year-over-year increase to $12.2 billion in fiscal 2024. This growth was primarily driven by:
- Strong demand for the company’s custom AI accelerator chips (XPUs)
- Robust sales of Ethernet networking solutions
Even more impressively, Tan projected that the addressable market for AI components could balloon to $60 billion to $90 billion by fiscal 2027—over four times the current market size.
For Q4 2024, the company reported a total revenue of $14.05 billion, marking a 51% increase from the previous year. Although this fell slightly below analyst expectations, investors were more focused on the explosive potential of AI growth. Broadcom’s key hyperscale customers include industry giants such as Meta, Alphabet, and ByteDance. Furthermore, the company has secured deals with OpenAI and Apple to develop custom AI chips.
With a forward price-to-earnings ratio of 29.8, Broadcom presents a more attractive valuation compared to rival Nvidia’s 31.03 multiple. While Nvidia leads the AI training chips market with its GPUs, Broadcom is carving out its own niche as a leader in AI inference chips and custom solutions for cloud giants. Analysts estimate that Broadcom could capture anywhere from 20% to 70% of the AI chip market by 2027. However, these market share projections remain highly uncertain due to the rapidly evolving landscape.
Source: Bloomberg