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Broadcom stock surged 38% over the course of Monday and Friday only to fall back 4% on Tuesday, as investors cheered the technology company's strong earnings, then tempered their growth hopes.
Shares of the semiconductor and infrastructure software group jumped from about $181 on Thursday to $250 at Monday's close, but retreated to $240 by the end of regular trading on Tuesday.
The upshot was that Broadcom's market value soared by $324 billion — more than either AbbVie or Coca-Cola are worth — to around $1.2 trillion, then promptly shed $46 billion on Tuesday.
Even so, Broadcom is now the eighth-largest US-listed company, ranking ahead of Warren Buffett's Berkshire Hathaway and just behind Elon Musk's Tesla.
Broadcom shares have surged by 115% this calendar year. They've roughly quadrupled since the start of 2023, adjusted for this summer's stock split. They've also ballooned 12-fold since the COVID crash of 2020, when they plunged below $20 on a split-adjusted basis.
The stock leaped on the back of Broadcom's fourth-quarter earnings last Thursday. Annual revenue grew 44% year-over-year to a record $52 billion, with AI sales up 220% at $12.2 billion.
The company also guided toward 22% year-on-year revenue growth this quarter, and CEO Hok Tan predicted the revenue opportunity in AI chips and AI networking would mushroom to between $60 billion and $90 billion in 2027.
Broadcom's performance was flattered by its $69 billion takeover of VMware, which closed in November 2023. But investors backed the company to make a fortune meeting the microchip and infrastructure needs of all the companies betting big on AI.
However, market sentiment toward Broadcom, Nvidia, and other chipmakers took a hit this week after Microsoft CEO Satya Nadella said on a podcast that his company was no longer constrained by the number of chips it could obtain. This suggests that either demand is waning or supply has caught up with demand.
Meanwhile, other tech bosses like Alphabet CEO Sundar Pichai have cautioned that AI progress is poised to slow.
Broadcom began as the semiconductor division of Hewlett-Packard in the 1960s. It was spun off as part of Agilent in 1999, sold to private equity in 2005, went public as Avago in 2009, then acquired a business called Broadcom and took its name in 2016.
