On December 13, according to the Financial Associated Press (edited by Liu Rui), after hours on Thursday Eastern Time, Broadcom announced a better-than-expected Earnings Reports for the fourth quarter, not only exceeding expectations in terms of profit performance but also more than doubling its AI revenue this year.

Even more surprisingly, the company's CEO revealed that Broadcom is developing custom AI Chips with three major cloud clients. This unexpected news caused Broadcom's stock price to soar over 15% in after-hours trading.

Broadcom released impressive Earnings Reports.

At the Earnings Reports conference, Broadcom CEO Hock Tan stated that the company is developing custom AI Chips with three major cloud clients, leading to a spike in the stock price of the chip manufacturer. The stock rose 13% in after-hours trading.

Broadcom's Earnings Reports showed that for the fourth quarter ending on November 3,

Broadcom's adjusted earnings per share were 1.42 dollars, exceeding expectations of 1.38 dollars;

Broadcom's revenue was 14.05 billion dollars, an increase of 51% from 9.3 billion dollars in the same period last year. This was slightly below the expected 14.09 billion dollars.

The company's net income for the fourth quarter was 4.32 billion dollars, equivalent to 0.90 dollars per share, an increase of 23% compared to 3.52 billion dollars and 0.83 dollars per share in the same period last year.

Broadcom stated that it expects revenue of 14.6 billion dollars in the next fiscal quarter, slightly better than the average analyst expectation of 14.57 billion dollars.

AI revenue surged.

In the semiconductor solutions segment, which includes AI Chips, revenue grew 12% from 8.03 billion dollars a year ago to 8.23 billion dollars.

Broadcom noted that the booming demand for generative AI infrastructure has led to a surge in business needs for the company. The company's AI revenue grew by 220% this year, reaching 12.2 billion dollars. Some of this growth came from Ethernet network components used to connect thousands of AI Chips.

Broadcom expects AI product revenue to grow 65% year-on-year in the first quarter of fiscal year 2025, far exceeding the overall 10% growth rate of its semiconductor solutions segment.

Broadcom reported that its infrastructure Software division generated 5.82 billion dollars in revenue this quarter, nearly doubling from 1.96 billion dollars last year. This includes a boost from the acquisition of VMware for 69 billion dollars, which was completed after the second quarter of last year.

Broadcom announced that it will raise its quarterly dividend by 11% in fiscal year 2025, reaching 59 cents per share.

There are still huge opportunities in the next three years.

The CEO of Broadcom also brought a bigger surprise to investors during the Earnings Reports conference call. Tan revealed that Broadcom is currently developing AI Chips with three very large clients, and he expects that by 2027, each client will deploy 1 million AI Chips in their network clusters.

He stated: "We see huge opportunities in the AI field over the next three years... A large number of hyperscale companies have already begun their journey to develop their own custom AI accelerators."

Tan indicated that by 2027, the total market opportunity for its AI Chips and AI network components could be between 60 billion to 90 billion dollars.

However, there is a potential bad news: Apple's ambition to use self-developed components in its devices will include shifting to its own developed Bluetooth and Wi-Fi Connection Chips starting next year, which will replace some of the components currently provided by Broadcom. According to insiders, this chip, codename Proxima, has been in development for several years and is now planned to begin initial production in 2025. Like other self-developed chips from Apple, Proxima will be produced by partner Taiwan Semiconductor.