Past Performance

• Fiscal Year 2024 Highlights
  • Consolidated Revenue: $51.6 billion, a 44% year-over-year increase.
  • Organic Revenue Growth: Over 9% excluding VMware.
  • Operating Profit: Excluding transition costs, grew 42% year-over-year.
  • Cash Return to Shareholders: Returned a record $22 billion, up 45% year-over-year through dividends, buybacks, and eliminations.
• Segment Performance
  • Semiconductor Solutions
    • Revenue: $30.1 billion, up 7% year-over-year.
    • AI Revenue: $12.2 billion, up 220% year-over-year, representing 41% of semiconductor revenue.
    • Networking Revenue: $4.5 billion, up 45% year-over-year.
    • AI Networking Revenue: 76% of networking, grew 158% year-over-year.
  • Infrastructure Software
    • Revenue: $21.5 billion, up 181% year-over-year.
    • VMware Integration: Significant growth in VMware-driven revenue and operating margins.

Trends in AI Space

• AI Revenue Growth

  • 2023 to 2024: AI revenue surged from $3.8 billion to $12.2 billion.
  • Projected Growth: AI is expected to drive a strong ramp from the 2024 base, aiming for a SAM of $60 billion to $90 billion by fiscal 2027.

• Custom AI Accelerators (XPUs)

  • Technology Advancement: Development of next-generation XPUs in 3-nanometer process node, first of its kind in the market.
  • Volume Shipments: On track for volume shipment at hyperscale customers in the second half of fiscal 2025.
  • Customer Roadmaps: Three hyper-scale customers have multi-generational AI XPU roadmaps, with plans to deploy 1 million XPU clusters by 2027.

• AI Connectivity

  • Growth: AI connectivity revenue grew 220% from fiscal 2023 to fiscal 2024.
  • Future Outlook: Continued momentum expected as more hyperscalers deploy Jericho3-AI in their fabrics.

Uptake of Products and Services

• Market Position

  • Leading Market Share: Positioned to achieve a leading market share in the AI semiconductor opportunity.
  • Technology Leadership: Combines XPUs and networking with superior silicon design, packaging, and optical technology.

• Customer Engagement

  • Hyperscale Customers: Deep engagement with three current hyperscale customers and two additional ones in advanced development stages.
  • Deployment Plans: Each current hyperscale customer plans to deploy 1 million XPU clusters by 2027, contributing to the expansive SAM.

• Industry Adoption

  • Broad Portfolio Appeal: Applications across various technologies including RF, WiFi, Bluetooth, sensing, and touch.
  • Recovery in Server Storage: Q4 saw a 20% recovery in server storage connectivity revenue, indicating growing adoption.
  • Wireless Revenue Growth: Q4 wireless revenue increased by 30% sequentially to $2.2 billion, driven by multi-year roadmaps with North American customers.

Financial Projections

Strategic Outlook

• AI as a Growth Driver

  • AI semiconductor business is projected to rapidly outgrow the non-AI semiconductor business.
  • Focus shifting to guiding semiconductor business by AI and non-AI revenue segments.

• Investment in R&D

  • Increased investment in R&D to support the development of advanced AI technologies and products.

• Debt Management

  • Strategic use of free cash flow to pay down debt, enhancing financial stability and reducing interest expenses.

Conclusion

Broadcom Inc. has demonstrated robust past performance with significant revenue growth, particularly driven by its AI segment. The company is strategically positioned in the AI space with advanced technology in XPUs and AI connectivity, catering to major hyperscale customers. The uptake of Broadcom's products and services is evident through strong customer engagement and increasing revenues across multiple segments. With continued investment in technology and strategic financial management, Broadcom is poised to capitalize on the expanding AI market.