Broadcom joins trillion-dollar club as Apple chip supplier

Fuelled by expectations of a significant increase in demand for its artificial intelligence (AI) chips, Broadcom Inc., a key chip supplier for Apple, has reached a historic $1 trillion market valuation. On December 13, the company’s stock soared by 24% to $224.80, marking its largest single-day gain since 2009. This surge came on the back of Broadcom’s bullish forecast for its AI product sales, which it expects to rise by 65% in the first fiscal quarter, far outpacing the company’s overall semiconductor growth of 10%.

Looking ahead, Broadcom projects the addressable market for its AI components, primarily used in data centres, could soar to $90 billion by fiscal 2027. This optimistic outlook has been a key driver behind the company's rapid rise, as investors are increasingly eager to capitalize on the AI boom, much like other tech firms such as Nvidia. Broadcom CEO Hock Tan confirmed that the company secured two new major customers in the hyperscaler sector, the biggest operators of data centres, positioning Broadcom as a significant player in the growing AI infrastructure market.

The company had originally forecasted annual AI-related revenue of $10 billion, but it surpassed this figure, generating $12.2 billion last year, with AI revenue alone growing by a staggering 220%. Broadcom’s total projected sales for the period ending in January stand at $14.6 billion, aligning with market expectations. In its fourth-quarter results, the company reported earnings of $1.42 per share, with revenues of nearly $14.1 billion, a solid increase driven by demand for both semiconductor and software products.

The semiconductor division reported a 12% rise in revenue to $8.23 billion, while software sales—helped by Broadcom’s $69 billion acquisition of VMware Inc.—jumped 200% to $5.82 billion. Despite concerns over Apple’s shift away from some Broadcom components for in-house alternatives, Tan reassured investors that Broadcom continues to have a strong working relationship with Apple, contributing to long-term technology roadmaps.

As Broadcom expands its footprint in AI, data center solutions, and software, the company remains a major force in the semiconductor industry, with plans to continue pursuing acquisitions to support its growth strategy.