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Broadcom Shares Surge 13% on AI-Driven Profit Growth

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Broadcom’s stock climbed 13% in extended trading after the company reported better-than-expected fourth-quarter earnings and highlighted a surge in artificial intelligence (AI) revenue, which more than tripled over the past year.

For the quarter ending November 3, Broadcom’s results exceeded analyst expectations:

  • Earnings per share (adjusted): $1.42 (vs. $1.38 expected)
  • Revenue: $14.05 billion (vs. $14.09 billion expected)

Broadcom projected first-quarter revenue of approximately $14.6 billion, slightly above the average analyst estimate of $14.57 billion. The company recorded a 51% year-over-year increase in quarterly revenue, reaching $14.05 billion, up from $9.3 billion.

AI Revenue Drives Growth
Broadcom’s semiconductor solutions division, which includes AI chips, saw revenue increase 12% to $8.23 billion compared to $8.03 billion a year ago. For the full year, AI revenue skyrocketed 220% to $12.2 billion, driven by generative AI infrastructure demands, including ethernet networking components that interconnect thousands of AI chips.

CEO Hock Tan emphasized the transformative potential of Broadcom’s AI technology on the company’s earnings call, stating, “We see an opportunity over the next three years in AI.” Tan revealed that Broadcom is collaborating with three major cloud providers to develop custom AI chips. Each customer is expected to deploy approximately 1 million AI chips within networked clusters by 2027.

Broadcom estimates that its AI chip market, including its proprietary XPUs and networking components, could generate between $60 billion and $90 billion in revenue by 2027.

Infrastructure Software Division Boost
Revenue in Broadcom’s infrastructure software division nearly tripled, reaching $5.82 billion in the fourth quarter, up from $1.96 billion a year ago. This surge was bolstered by the recent $69 billion acquisition of VMware, which was finalized after the previous year’s reporting period.

Dividend Increase for Fiscal 2025
Broadcom announced an 11% increase in its quarterly dividend for fiscal year 2025, raising it to 59 cents per share.

As the demand for AI infrastructure and custom solutions continues to grow, Broadcom is well-positioned to capitalize on this trend, particularly with its strategic collaborations and expanded market opportunities.

Nvidia Faces Antimonopoly Investigation in China, Shares Decline

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Nvidia’s shares experienced a decline of about 2.6% on Monday after China’s State Administration for Market Regulation (SAMR) announced an investigation into the company over potential violations of the country’s antimonopoly laws.

The investigation focuses on Nvidia’s 2020 acquisition of Mellanox, an Israeli technology company specializing in network solutions for data centers and servers. The Chinese regulator is examining specific agreements related to this acquisition, according to an official statement.

This development comes amid escalating tensions between the U.S. and China, particularly in the semiconductor industry. The Biden administration recently imposed new restrictions on semiconductor toolmakers, and the investigation could be linked to broader geopolitical factors. The U.S. has already restricted Nvidia and other chipmakers from selling their most advanced AI chips to China, aiming to curb the country’s military advancements.

Nvidia, which has seen its stock rise dramatically in 2024 due to growing demand for AI technologies, responded to the investigation, expressing willingness to cooperate with regulators. In a statement, Nvidia emphasized that its success is due to its products’ merits and customer satisfaction, highlighting that clients have the freedom to choose from various solutions.

 

China Launches Antitrust Probe Into Nvidia Amid US-China Chip Tensions

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China announced on Monday it has launched an antitrust investigation into Nvidia, targeting alleged violations of the country’s anti-monopoly law. This move is seen as a countermeasure to recent U.S. restrictions on China’s semiconductor industry, escalating tensions in the ongoing tech rivalry between the two nations.

The State Administration for Market Regulation (SAMR) stated that Nvidia, known for its AI and gaming chips, is under scrutiny for potentially breaching conditions set during its 2020 acquisition of Israeli chipmaker Mellanox Technologies. While details remain scarce, the regulator mentioned suspicions about Nvidia violating commitments to supply products on “fair, reasonable, and non-discriminatory” terms, among other stipulations.

Retaliatory Backdrop

This probe follows heightened tensions between Washington and Beijing. Last week, the U.S. introduced new restrictions on 140 Chinese companies, further curbing China’s access to advanced semiconductor technology. In response, Beijing banned exports of critical minerals like gallium, germanium, and antimony to the U.S.

In addition, four major Chinese industry associations called on domestic firms to reduce reliance on U.S. chips, labeling them “unsafe” and encouraging purchases from local suppliers. Nvidia, which once commanded over 90% of China’s AI chip market, has faced diminishing revenue from China, dropping from 26% of its global total two years ago to 17% by January 2023.

Nvidia’s shares fell by 2.5% on Monday following the announcement. The company stated it would cooperate with regulators and reaffirmed its commitment to honoring agreements in all regions. However, analysts like Bob O’Donnell from TECHnalysis Research believe the investigation’s immediate impact on Nvidia will be limited, as U.S. restrictions already prevent the sale of its most advanced chips to China.

Nvidia’s Strategic Adjustments

U.S. sanctions in 2022 prohibited Nvidia from selling its A100 and H100 AI chips to China, prompting the company to create modified versions for the Chinese market. Further tightened U.S. export controls in 2023 led Nvidia to develop new variants tailored to Chinese restrictions. Despite these challenges, Nvidia faces mounting competition from domestic players like Huawei.

China’s Antitrust Track Record

China’s antitrust probes into foreign tech companies are not new. The most prominent case occurred in 2013, when China fined Qualcomm $975 million for market abuse in wireless communication standards. Similar to that case, Nvidia is accused of practices such as discriminatory terms, product bundling, and unfair supply conditions—issues tied to the Mellanox acquisition conditions.

The investigation could signal Beijing’s intent to leverage regulatory tools to counter U.S. sanctions while fostering its domestic chip industry.