Broadcom Inc Q4 2024 Earnings Call Summary

The following is excerpted from the question-and-answer section of the transcript.

Question: Blayne Curtis - Jefferies LLC - Analyst : Hey. Thanks so much for taking my question. It's kind of a clarification and a question. I thought I heard you say that AI networking revenue was 76% of networking. I just couldn't get that math right. But maybe the broader question is you've seen growth off that low point in April in AI. Can you talk about ASIC strength versus networking, the trends you're seeing in October into January? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 12, 2024 / 10:00PM, AVGO.OQ - Q4 2024 Broadcom Inc Earnings Call

Question: CJ Muse - Cantor Fitzgerald & Co. - Analyst : Yeah. Good afternoon. Thank you for taking the question. Hock, I wanted to hit on the $60 billion to $90 billion revenue range for fiscal '27 for AI. I was hoping you could speak to the mix you see there between XPU and networking. And within that construct, are you including all the customers that you see out there in hyperscale and vertically integrated consumers? Or any sort of help in terms of what you're including in that potential mix would be very helpful. Thank you.

Question: Joe Moore - Morgan Stanley & Co. LLC - Analyst : Great. Thank you. I wonder if you could talk to the XPU market. How are your customers reacting to some of the rack scale products from your -- the merchant competitor from NVIDIA? How do they get the connectivity to multiple XPUs inside the rack? Just how does that present a competitive dynamic for you? Thanks.

Question: Harlan Sur - J.P. Morgan Securities LLC - Analyst : Hi, good afternoon. Thanks for taking my question. Hock, I know the team has been putting out an AI guide for fiscal '25, and I appreciate the multi-year SAM opportunity outlook. But for this year, can we look at what your customers on the networking and custom accelerators are thinking about from a data center CapEx spending perspective? So for example, our latest roll up is that the top four cloud and hyperscalers are going to grow their CapEx 35%, 40% in fiscal '25. I would expect that your AI business would sort of closely mirror this trend, maybe even think about it as a base case when we think about Ethernet taking share from InfiniBand, ASICs growing faster than merchant GPUs. Maybe the profile of your AI business can go even faster than the CapEx trends. Either way, plus or minus, is that how we should think about the growth in the AI business roughly in line with CapEx growth trends of your large cloud and hyperscale customers?

Question: Benjamin Reitzes - Melius Research LLC - Analyst : Hey, thanks a lot and nice quarter there, Hock. I wanted to ask you about the $60 billion to $90 billion with a little more clarity. Previously, you've talked about a cumulative TAM from your customers. And that -- is this a run rate TAM or a cumulative TAM? Kind of meaning, do we take the $12.2 billion, then add some growth for the next two years, and then think of it that way? Or do we think of -- we take a share of like a $75 billion TAM and what your revenue yield is? And then I just also was hoping you could clarify; you're not including those two new customers. Do those two customers have the same $20 billion to $30 billion TAM each that the current three do? Or do you think they're smaller or bigger? Sorry about the multi-part question there.

Question: Ross Seymore - Deutsche Bank Securities Inc. - Analyst : Thanks for the -- ask a question. I want to talk about the cash return side of things. Great job on the dividend increase. The other 50%, is fiscal '25 a year where you're going to still be paying down debt? Share repurchase is in the mix? Or Hock, you mentioned that VMware, the integration is largely now behind you. Usually, that puts you on the prowl looking for deals. Is that something we should, in general, think about? Or is there regulatory issues that are still a concern? Just trying to figure out what that other 50% is going to go towards this year.

Question: Vivek Arya - BofA Global Research (US) - Analyst : Thanks for taking my question. Hock, back to AI. What do you think is the SAM in 2024, so we can get a baseline view of what your $12.2 billion in sales represent? And is your assumption that you maintain this share, right? You grow it? Or what happens to that share over time? And then related question to that is what happens to your semiconductor gross margins if AI grows to such an extent? Because you gave us a mid-single-digit for non-AI. And I'm wondering, if AI gets to be such a big part of semis, what happens to gross margin? So both kind of the baseline of what the SAM was this year and what happens to your share and margins over time? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 12, 2024 / 10:00PM, AVGO.OQ - Q4 2024 Broadcom Inc Earnings Call

Question: Harsh Kumar - Piper Sandler & Co. - Analyst : Yeah. Hey. First of all, guys, huge congratulations on successfully integrating VMware so much ahead of your timeframe. And Hock, I had a two-part question. Is there a simple dollar metric that we can think of for network attached to XPUs? For example, is $1 of networking to $1 of XPUs? And then for my question, in one of your posts, you talked about sovereign data centers and VMware. I guess my question is, is there a play for Broadcom outside of the software piece? In other words, are you noticing that sovereign guys are wanting to use XPUs? Or are they strictly sticking to merchant silicon?

Question: Toshiya Hari - Goldman Sachs & Company, Inc. - Analyst : Hi, good afternoon. Thank you so much for taking the question. The $60 billion to $90 billion SAM forecast for fiscal '27, Hock, I'm curious if you guys have a view on the TAM. So just want to know how big the SAM is as a percentage of the total opportunity set. And then my main question is you talked about going for leading market share within your SAM, which makes sense. I assume you're not assuming 100% share. So the value of that $60 billion to $90 billion that you won't be capturing, is that a function of some of your hyperscale customers wanting to capture value internally? Or is that always having a backup or a second source? Is there a low-margin business that you just simply won't pursue? How should we think about the part of the $60 billion to $90 billion that you won't be going after or won't be capturing? Thank you.

Question: William Stein - Truist Securities - Analyst : Great. Thanks for taking my question. I want to add my congrats to all the great results this year and for the quarter and outlook. But Hock, this is sort of a stunning turn of events in the last year with what we've been accustomed to thinking of as a sort of mature, slow-growth business at its core, with all the M&A tacked on to it. And I wonder, with the sudden acceleration of the organic business given your exposure to these capabilities in ASICs to bring AI technologies to customers, does that change your interest level in M&A? And does it change your focus area of potential M&A going forward? Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 12, 2024 / 10:00PM, AVGO.OQ - Q4 2024 Broadcom Inc Earnings Call

Question: Vijay Rakesh - Mizuho Securities USA, LLC - Analyst : Hi, Hock. great results here. Just a question back on the AI custom silicon side. I guess it looks like of the $17.5 billion TAM here -- or SAM here, you have about 70% share. So assuming that 70% looking out to '27, your custom silicon AI revenues should be like $50 billion in fiscal '27. So do we have a good line of sight into fiscal '26, showing a pretty nice ramp to hit those numbers, maybe with Ultra Ethernet and all that to do the 1 million XPUs? How do you see that? Thanks.

Question: Vijay Rakesh - Mizuho Securities USA, LLC - Analyst : Got it. And the other two CSPs, when do you see them ramping?