Broadcom soars 23% to a $1 trillion valuation after earnings as the company eyes big AI opportunity ahead

• Broadcom's stock soared on Friday following its latest earnings report.
• The stock surged as much as 23% to hit a $1 trillion market cap for the first time.
• The company pointed to strong AI demand, which it forecast will accelerate in coming years.

Broadcom shares soared on Friday, pushing the chipmaker's valuation above $1 trillion for the first time ever.

The stock climbed 23% to trade at $221.53 per share after Broadcom reported a jump in revenue in the most recent quarter.

Quarterly revenue increased to $14.05 billion, falling short of analysts estimates of $14.07 billion but marking a 41% rise from the same time last year.

Net profit was $4.3 billion for the quarter, compared to $3.5 billion for the same period a year ago. Earnings per share were $1.42, compared with analyst estimates of $1.39, according to FactSet.

Boosting investor optimism was the chipmaker's strong guidance, forecasting revenue of $14.6 billion for its fiscal first quarter, above analysts' expectations of $14.47 billion and up from $11.96 billion for the same time a year before.

The company pointed to strong AI demand in the most recent quarter, which it said will only accelerate in coming quarters.

CEO Hock Tan said he expects the market for its AI chips and AI networking to pose a revenue opportunity between $60 billion and $90 billion for the 2027 fiscal year, up from a range of $15 billion to $20 billion in the 2024 fiscal year.

"We see an opportunity in AI over the next three years," Tan said on the earnings call. "Massive specific hyperscalers have begun their respective journeys to develop their own custom AI accelerators."

Tan also said Broadcom has recently won two major hyperscaler customers, in addition to its three existing customers.

Several analysts raised their price targets on the stock after the earnings, with UBS analysts led by Timothy Arcuri upping their target from $200 to $220.

"Results and guidance were fine and likely better than many had feared given investor concerns heading into the print, but the highlight was AVGO's messaging on its expanding AI opportunity," the analysts said in a Friday note.