Broadcom CEO Hock Tan.
Lucas Jackson | Reuters
Broadcom On Thursday, it reported better-than-expected fourth-quarter earnings and said AI revenue for the year more than tripled.
The chipmaker's stock jumped after Broadcom CEO Hock Tan said the company was developing custom chips for artificial intelligence with three major cloud customers. Shares rose 13% in extended trading.
Here's how Broadcom performed against LSEG estimates for the quarter ending November 3:
Earnings per share: $1.42, adjusted vs. $1.38 expected, Revenue: $14.05 billion vs. $14.09 billion expected
Broadcom said it expects first-quarter revenue to be about $14.6 billion, ahead of analysts' average estimate of $14.57 billion. For the fourth quarter, year-over-year revenue rose 51% from $9.3 billion.
Net income in the fourth quarter was $4.32 billion, or 90 cents per share, up 23% from $3.52 billion, or 83 cents per share, in the same quarter a year earlier.
In its semiconductor solutions group, which includes the company's artificial intelligence chips, revenue increased 12% to $8.23 billion from $8.03 billion last year.
Broadcom is seeing increasing demand due to the boom in generative AI infrastructure. Over the course of the year, the company said AI revenue jumped 220% to $12.2 billion. Some of this growth comes from Ethernet network segments, which are used to connect thousands of AI chips together.
“We see opportunity over the next three years in AI,” Tan told investors on the earnings call. “A large number of hyperscalers have begun their journey to develop their own custom AI accelerators.”
Tan said Broadcom is currently developing AI chips with three very large customers, each of which it expects to deploy 1 million AI chips in network clusters by 2027. Tan said the overall market opportunity for its AI chips, which it calls XPUs Likewise, the value of parts of artificial intelligence networks could range between $60 billion and $90 billion by 2027.
Broadcom said its infrastructure software division generated revenue of $5.82 billion during the quarter, nearly triple last year's revenue of $1.96 billion. This includes a boost from the $69 billion acquisition of VMware, which was completed after the same quarter last year.
Broadcom said it will increase its quarterly dividend by 11% in fiscal 2025 to 59 cents per share.
Watch: Broadcom shares rise on earnings
