Broadcom Stock Eyes Record High On AI-Powered Earnings Beat: Retail Bets On $1 Trillion Market Cap

Broadcom stock jumped as much as 19% in premarket trading Friday after the company beat fourth-quarter earnings estimates and delivered a strong outlook, fueled by booming AI chip sales. 

The premarket rally has investors eyeing a record high of over $200 per share and bringing Broadcom closer to a $1 trillion market capitalization.

Most retail investors feel that Broadcom’s AI growth justifies the stock’s potential valuation, according to an ongoing poll  on Stocktwits. 

The semiconductor powerhouse reported AI product sales are expected to grow by 65% in the fiscal first quarter, far surpassing the 10% growth projected for its overall semiconductor segment. 

During its earnings call, Broadcom highlighted that the addressable market for its AI components in data centers could reach $90 billion by fiscal 2027.

CEO Hock Tan also revealed that Broadcom secured two major hyperscaler customers, further cementing its position in the competitive AI market. 

This optimism is rooted in Broadcom’s expanding AI-related revenue, which grew 220% year-over-year, reaching $12.2 billion in fiscal 2024. However, the company’s demand for non-AI chips is forecasted to decline in the upcoming quarter.

Broadcom reported total fourth-quarter sales of $14.07 billion, slightly ahead of Wall Street's expectation of $14.05 billion, while earnings per share came in at $1.42, topping estimates of $1.39. 

The company forecasts $14.6 billion in revenue for the fiscal first quarter, in line with analyst projections.

Investors on Stocktwits currently predicted that Broadcom was likely to beat earnings and give bullish guidance, ahead of the announcement. 

In addition to its AI momentum, Broadcom updated investors on its VMware integration. 

Tan stated that VMware’s operational costs have halved to $1.2 billion per quarter, with margins soaring from under 30% to 70%. 

VMware also achieved $2.7 billion in annual booking value for the quarter, a $200 million increase from Q3, and sold subscriptions covering 21 million processor cores, primarily for its VMware Cloud Foundation suite.

Broadcom Sentiment and Message Volume on Dec 13 as of 8:00 a.m. ET | Source: Stocktwits

Retail sentiment toward Broadcom surged to its highest level this year, with Stocktwits users overwhelmingly bullish on the company’s results. 

Chatter around the stock also hit an annual peak, with investors celebrating Broadcom’s strong performance and its trajectory toward a potential $1 trillion valuation.

Broadcom's stock has risen over 62% year-to-date as the company positions itself as a key supplier for major tech firms seeking alternatives to Nvidia's costly AI processors.

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