Broadcom's stock experienced a significant jump despite a lackluster Q4 earnings report. The company's optimistic outlook on the addressable market for its AI segments fueled investor enthusiasm, but concerns remain about the sustainability of this growth.
Broadcom ’s stock surged 35% in two days despite a mediocre Q4, as management offered investors a picturesque addressable market forecast for 2027. Q4 was not the blowout report the market made it out to be, as Broadcom fell just short of revenue estimates while guiding Q1 barely above consensus. Despite this, the market did solidify that momentum continues to build for AI stocks entering 2025.
Broadcom’s commentary on the call as to the serviceable addressable market for its two leading AI segments, custom silicon and networking, is why the stock moved a whopping 25%. As a reminder, a serviceable addressable market refers to market size the company can service, and is not a forecast of the company’s revenue. While Broadcom gave investors a reason to dream, it’s not the stock’s ‘Nvidia moment’ despite the surge in the stock price resembling Nvidia’s 2023 breakout. Instead, Broadcom is reporting flat QoQ AI revenue with the 200% year-over-year number being old news (Broadcom had guided for $12B in AI revenue in Q3 and only marginally beat that figure). Being a supplier of semiconductor and software products, Broadcom Inc (NASDAQ: AVGO), logo seen displayed on a smartphone with an Artificial intelligence (AI) chip and symbol in the background. (Photo Illustration by Budrul Chukrut/SOPA Images/LightRocket via Getty Images)Among the AI titans, Broadcom is the one of the only stocks to see lumpy AI growth, reporting flat AI revenue growth from Q2 to Q3 – with expectations it remains at a mere 3% QoQ growth to start fiscal 2025. This occurred roughly a month before tariffs Below, I provide data that shows the move in Broadcom’s stock was premature, creating outsized pressure on Broadcom to live up to AI juggernaut Nvidia in 2025, which is unrealistic given Broadcom has only ~25% of revenue from AI versus 80% of revenue from Nvidi
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