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Broadcom Projects Strong Revenue for FY25
Broadcom has an optimistic view for fiscal year 2025 (FY25). The company predicts first-quarter revenue to reach $14.6 billion. This marks a 22% increase compared to last year.
Strong AI Chip Demand
The company sees robust demand for its custom AI chips. The company expects AI revenues to grow by 65% in Q1, hitting $3.8 billion. CEO Hock Tan believes AI could generate $60 billion to $90 billion annually by fiscal 2027. Broadcom’s shares jumped 14% after this announcement.
Q4 FY24 Performance
In Q4 FY24, The company reported consolidated revenue of $14.054 billion. This is a 51% increase from the previous year. However, this was slightly below Wall Street forecasts of $14.09 billion.
| Quarter | Revenue | YoY Increase |
|---|---|---|
| Q4 FY24 | $14.054 billion | 51% |
Semiconductor and Software Growth
The semiconductor segment saw a 220% surge in AI-related revenues, reaching $12.2 billion. Infrastructure software revenue also grew 196% YoY to $5.8 billion. This growth was supported by the integration of VMware.
AI Semiconductor Solutions
Broadcom’s AI semiconductor solutions have gained traction. Hyperscale customers are adopting custom accelerators and networking chips. These are essential for generative AI applications, such as ChatGPT. AI-related networking revenues climbed 158% YoY.
VMware Integration
Broadcom reported strong cash generation in Q4 with $5.5 billion in free cash flow. This equals 39% of revenue. Tan stated that the AI semiconductor business will outgrow the non-AI segment. The company successfully shipped next-generation AI chips in three-nanometer technology. Volume production is expected in the second half of fiscal 2025.
VMware Acquisition
The $69 billion VMware acquisition completed earlier this year. This boosted Broadcom’s infrastructure software segment. Despite customer protests over price increases, VMware’s annualized booking value increased to $2.7 billion in Q4. Its operating margin rose to 70%, up from less than 30% before the acquisition. The company also reduced VMware’s quarterly operating expenses to $1.2 billion from $2.4 billion pre-acquisition.
Future Outlook
Broadcom is creating long-term roadmaps with major clients. The company aims to sustain its leadership in the AI semiconductor market. Tan highlighted the focus on AI and the success in shipping next-generation AI chips.
This outlook shows Broadcom’s strong position in the tech industry. With the expected growth in AI chip demand, the company is set to achieve significant revenue growth in FY25.
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