Broadcom shares jump 21%, pushing company past $1 trillion market cap

Shares of Broadcom rose more than 21% on Friday morning, pushing the company’s market cap past $1 trillion for the first time. It will be Broadcom’s best trading day yet if the move holds until the closing bell.

The measure comes after the company reported fourth quarter results which beat Wall Street profit expectations and showed strong growth in artificial intelligence revenue.

Broadcom reported revenue of $14.05 billion in the fourth quarter, up 51% from a year earlier, but below the $14.09 billion analysts were expecting, according to LSEG. At Broadcom’s semiconductor solutions group, which includes its AI chips, revenue rose 12% to $8.23 billion from $8.03 billion a year ago.

The company said AI revenue rose 220% for the year to $12.2 billion. Shares rose after-hours Thursday when Broadcom CEO Hock Tan said the company is developing custom AI chips with big cloud customers.

Broadcom’s net income was $4.32 billion, or 90 cents per share, up 23% from $3.52 billion, or 83 cents per share, in the year-ago quarter.

Bernstein analysts wrote in a note on Friday that Tan could look good with a leather jacket, a glance Nvidia The signature style of CEO Jensen Huang. They said there were a lot of nerves ahead of Thursday’s results, but Broadcom’s fourth-quarter earnings were “decent” and they were encouraged by AI management’s short- and long-term outlook.

Analysts raised their price target on the stock to $250 from $195.

“Overall, the AI ​​story looks like it’s really catching on,” the analysts wrote.

Analysts at Bank of America reiterated their buy rating on the stock, in part because of its “growing AI opportunity.” They said Broadcom currently dominates the market for custom chips for internal workloads, but warned there is some risk from “tough competition against NVDA’s strength in commercial silicon and enterprise customers.”

Morgan Stanley analysts said Broadcom’s comments on artificial intelligence will likely add to the company’s long-term enthusiasm, which they expect will continue to rise. They said Broadcom remains “one of the most attractive ways to play AI semis” over the next two to three years.

“Overall, the quarter itself will provide relief from low near-term expectations, and longer-term AI commentary will reignite enthusiasm for the longer-term prospects with custom AI chips, enthusiasm that was already a fever pitch,” analysts wrote in a note on Friday.

– CNBC’s Michael Bloom and Kif Leswing contributed to this report.