Amazon bets on selling cashierless technology to retailers after pulling it from most U.S. stores
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In 2012, Amazon founder Jeff Bezos was asked by TV host Charlie Rose whether his e-commerce company would ever venture into brick-and-mortar stores. Bezos said shoppers were well-served by existing physical retailers and that Amazon wasn’t interested in launching a “me-too” product.
“We want to do something that’s uniquely Amazon,” Bezos said. “If we can find that idea, and we haven’t found it yet, but if we can find that idea, we would love to open physical stores.”
Six years later, Amazon landed on a revolutionary retail concept that it hoped would transform how people shop in brick-and-mortar stores. The company launched its first Amazon Go convenience store featuring a new kind of technology, called “Just Walk Out.”
In practice, customers would be able to load up their cart and exit the store without standing in a checkout line. Amazon soon brought cashierless checkout to its Fresh supermarkets and two Whole Foods locations. In 2020, the company began licensing Just Walk Out technology to third parties, signing on retailers in stadiums, airports and hospitals.
But the company has since taken a sideways turn.
In April, Amazon announced it was removing cashierless checkout from its U.S. Fresh stores and Whole Foods locations, a move that coincided with CEO Andy Jassy’s efforts to rein in costs to meet rapidly changing macro conditions.
As part of that effort, Amazon also reevaluated its retail plans. The company discontinued some of its retail chains, closed eight Amazon Go stores, and hit pause on new Fresh store openings. It’s launched a handful of new Fresh stores in recent months.
In place of Just Walk Out, which typically requires ceiling-mounted cameras, shelf sensors and gated entry points, Amazon Fresh stores and Whole Foods supermarkets will feature Dash Carts. The carts track and tally up items as shoppers place them in bags, enabling people to skip the checkout line. Amazon continues to use Just Walk Out in its grab-and-go marts and UK Fresh stores.
A woman uses a dash cart during her grocery-shopping at a Whole Foods store as Amazon launches smart shopping carts at Whole Foods stores in San Mateo, California, United States on February 25, 2024. The smart shopping cart makes grocery shopping quicker by allowing customers to scan products right into their cart as they shop and then skip the checkout line.
Tayfun Coskun | Anadolu | Getty Images
The main challenge for Amazon and other startups working on autonomous checkout is the need to scale it to enough locations and retail categories that it becomes a natural part of in-store shopping, said Jordan Berke, founder and CEO of retail consulting firm Tomorrow.
“Until that’s the case, it’s an uphill battle,” Berke said. “These technology providers, Amazon included, are going to have to subsidize and continue to invest to train the retailer, train the consumer, train the market, that this is a mainstream experience that we can all trust and not need to think about as we walk in and out of a store.”
‘The hardest problem to solve’
At one point Amazon saw Just Walk Out becoming a core part of the experience of shopping in its physical stores. The company in 2018 planned to open as many as 3,000 Amazon Go stores within a few years, Bloomberg reported at the time, citing people familiar with the plans.
Bezos had assigned top talent from across the company, including a longtime Amazon executive who built the original Kindle e-reader, to work on cashierless checkout. The technology was considered a key ingredient in Amazon’s long-running pursuit to become a giant in the $1.6 trillion U.S. grocery market.
When Amazon debuted Just Walk Out in January 2018, it was a “quake moment” for the industry, causing Walmart and “almost every other retailer” to leap into action and consider developing their own vision-based checkout systems, said Berke, who previously led Walmart’s e-commerce business in China.
Amazon and other retailers soon learned that automating the checkout process is “the hardest problem to solve,” Berke said. Cashierless checkout systems require a hefty upfront investment to blanket a store with overhead cameras and hire staff to label and review shopping data.
“It meant a store had to dramatically increase its sales in order to pay off that investment,” Berke said.
Walmart teams found as part of a cost analysis in early 2019 that it would run a retailer between $10 million and $15 million to create a similar computer vision-based checkout system for a 40,000 square foot supermarket, Berke said.
Just Walk Out became an expensive project for Amazon, too. In 2019 and 2020, the company shelled out roughly $1 billion per year, including research and development costs and capital expenditures, to “learn and scale” the technology, Berke said. He said those figures are based on discussions with a former Just Walk Out executive who left Amazon to join Walmart. Amazon didn’t provide a comment on the figures.
Many retailers have since moved on from computer vision in favor of simpler methods like mobile checkout through an app, Berke said.
Walmart uses a self-checkout app in its stores, while supermarket chain Kroger has been experimenting with Instacart’s Caper connected shopping carts at some locations. Retailers like Target and Dollar General are rethinking self-checkout entirely due to concerns of rising theft in their stores, and have added more traditional checkout lanes.
While it’s no longer featuring Just Walk Out as prominently in its own stores, Amazon says it has inked deals with a growing list of customers. More than 200 third-party stores have paid Amazon to install the cashierless system. The company expects to double the number of third-party Just Walk Out stores this year, Jon Jenkins, who previously served as vice president of Amazon’s Just Walk Out technology, said in a recent interview. Jenkins departed Amazon in late September to become technology chief of electric bike and scooter startup Lime, according to his LinkedIn page.
Jon Jenkins, Amazon’s former vice president of Just Walk Out technology, gives a tour of the mock convenience store where the company tests its cashierless checkout system in Seattle, Washington, on August 22, 2024.
CNBC
Jenkins disputed characterizations that Amazon’s phasing out of Just Walk Out from its own supermarkets represents a setback or a sign of the technology’s demise. He said Amazon proved through tests in its own grocery stores that the technology is “incredibly capable,” noting it deployed the system in large supermarkets with “600 people in the store at the same time.”
Other startups such as AiFi and Grabango have developed autonomous systems for supermarkets, convenience stores and other retailers, but widespread adoption has been slow, as the technology remains costly and challenging to operate in large store formats.
Inside the lab
Amazon is still fine-tuning its Just Walk Out technology.
In August, CNBC got the first on-camera look at a mock convenience store where Amazon tests the system before deploying it in third party retailers and its own stores.
The testing lab, which it calls “beverage base camp,” is located in Amazon’s Seattle headquarters. It has faux gates that mimic the experience of scanning your smartphone or credit card to enter a Just Walk Out store. The walls are lined with shelves of typical grab-and-go products like Milky Way bars, pita chips and gum, and there are coolers stocked with Coke cans and other beverages.
Amazon sets up Just Walk Out stores by first creating a 3D scan using LiDAR machines or iPads that help it determine where to place cameras so they have the clearest view.
“The goal is to have the fewest number of cameras possible, so we optimize the camera placement so that we can get enough coverage on each fixture to see what is happening in the store,” Jenkins said.
The system determines what shoppers purchased using several inputs, including the 3D scans, a catalog of product images, the video footage, and weight sensors on the shelves. Amazon in July updated the AI system behind its Just Walk Out technology to handle all the inputs in a store simultaneously.
The new “multi-modal” system can generate receipts faster by more accurately predicting which items shoppers have picked up and put back on shelves. The company said these changes should make it “faster, easier to deploy and more efficient” for retailers who install the system in their stores.
Amazon’s “primary focus” is selling the technology to third-party businesses and deploying it in small to medium-sized store formats, where the system “tends to generate a little better [return on investment],” Jenkins said. Earlier this year, Amazon also began selling its connected grocery carts to third parties.
Amazon in September announced several new third-party Just Walk Out stores at universities and sports stadiums.
CNBC
At one Just Walk Out store, inside Seattle’s Lumen Field, home to the NFL’s Seahawks, the company said it boosted sales by 112% last season, with 85% more transactions during the course of a game.
“It was awesome that we had our own stores as the laboratory to sort of build and launch this,” Jenkins said. “But over time, like many things at Amazon, the success of this project and the product will depend on third parties adopting the technology. There will always be more third-party stores in the world than there will be first-party stores.”
Amazon has used a similar playbook in in the past. Amazon Web Services, the company’s wildly successful cloud-computing unit, originated from the company’s need for IT infrastructure to support its fast-growing online retail business. And in recent years, Amazon has leveraged its logistics and fulfillment network to provide services for third parties.
With Just Walk Out, Amazon faces the challenge of convincing retailers that they can trust one of their biggest competitors with handling valuable shopper data.
In 2022, Amazon moved the team behind Just Walk Out from its retail organization to AWS. It marked one of the clearest signals yet that Amazon is serious about selling the technology to other retailers, and could help ease some fears among rivals.
“They’re clearly in sales mode,” said Sucharita Kodali, retail analyst at Forrester Research, in an interview.
Kodali said Amazon still has a “long way to go” before the technology is ubiquitous. Getting there will require patience from Amazon investors and data that shows both retailers and shoppers are embracing the technology.
“There’s almost a viral effect that will occur over time,” she said. “It’s just going to take a long time because you’ve got to cycle through everybody in America having this experience, and for the most part, it’s just Amazon fighting this fight right now.”
Watch the video for a behind-the-scenes look at Just Walk Out: https://www.cnbc.com/video/2024/10/02/amazon-is-making-a-big-bet-on-selling-cashierless-tech-to-outsiders.html
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Technology
Reddit challenges Australia’s under-16 social media ban in High Court filing, says law curbs political speech
Published
3 hours agoon
December 12, 2025By
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Sopa Images | Lightrocket | Getty Images
Reddit, the popular community-focused forum, has launched a legal challenge against Australia’s social media ban for teens under 16, arguing that the newly enacted law is ineffective and goes too far by restricting political discussion online.
In its application to Australia’s High Court, the social news and aggregation platform said the law is “invalid on the basis of the implied freedom of political communication”, saying that it burdens political communication.
Canberra’s ban came into effect on Wednesday and targeted 10 major services, including Alphabet‘s YouTube, Meta’s Instagram, ByteDance’s TikTok, Reddit, Snapchat and Elon Musk’s X. All targeted platforms had agreed to comply with the policy to varying degrees.
Australia’s Prime Minister’s office, Attorney-General’s Department and other social media platforms did not immediately reply to requests for comment.
Under the law, the targeted platforms will have to take “reasonable steps” to prevent underage access, using age–verification methods such as inference from online activity, facial estimation via selfies, uploaded IDs, or linked bank details.
Reddit’s application to the courts seeks to either declare the law invalid or exclude the platform from the provisions of the law.
In a statement to CNBC, Reddit said that while it agrees with the importance of protecting persons under 16, the law could isolate teens “from the ability to engage in age-appropriate community experiences (including political discussions).”
It also said in its application that the law “burdens political communication,” saying “the political views of children inform the electoral choices of many current electors, including their parents and their teachers, as well as others interested in the views of those soon to reach the age of maturity.”
The platform also argued that it should not be subject to the law, saying it operates more as a forum for adults facilitating “knowledge sharing” between users than as a traditional social network, saying that it does not import contact lists or address books.
“Reddit is significantly different from other sites that allow for users to become “friends” with one another, or to post photos about themselves, or to organise events,” the platform said in its application.
Reddit further said in its court filing that most content on its platform is accessible without an account, and pointed out a person under the age of 16 “can be more easily protected from online harm if they have an account, being the very thing that is prohibited.”
“That is because the account can be subject to settings that limit their access to particular kinds of content that may be harmful to them,” it adds.
Despite its objections, Reddit said that the challenge was not an attempt to avoid complying with the law, nor was it an effort to retain young users for business reasons.
“There are more targeted, privacy-preserving measures to protect young people online without resorting to blanket bans,” the platform said.
— CNBC’s Dylan Butts contributed to this story.
Technology
Altman and Musk launched OpenAI as a nonprofit 10 years ago. Now they’re rivals in a trillion-dollar market
Published
4 hours agoon
December 12, 2025By
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Open AI CEO Sam Altman speaks during a talk session with SoftBank Group CEO Masayoshi Son at an event titled “Transforming Business through AI” in Tokyo, Japan, on February 03, 2025.
Tomohiro Ohsumi | Getty Images
On Dec. 11, 2015, OpenAI launched as a nonprofit research lab after Elon Musk and a group of prominent techies, including Peter Thiel and Reid Hoffman, pledged $1 billion to develop artificial intelligence for the benefit of humanity. The idea was for the project to be be free of commercial pressures and the pursuit of money.
A decade later, that founding mission is all but forgotten.
Musk, now the world’s richest person, is long gone, having created rival startup xAI. And he’s been engaged in a heated legal and public relations fight with OpenAI CEO and co-founder Sam Altman.
Far from the nonprofit realm, OpenAI has emerged as one of the fastest-growing commercial entities on the planet, zooming to a $500 billion private market valuation, with almost all of that value accruing since the company’s launch of ChatGPT three years ago. More than 800 million people now use the chatbot every week.
Musk’s xAI, meanwhile, is expected to close a $15 billion round at a $230 billion pre-money valuation this month, sources familiar with the matter told CNBC’s David Faber in late November.
OpenAI and xAI are two of the main companies, along with Google, Anthropic and Meta, pouring money into AI models, as the market rapidly evolves from text-based chatbots to AI-generated videos and more advanced compute-intensive forms of content, as well as into agentic AI, with large enterprises customizing tools to enhance productivity.
For OpenAI, the price tag is almost incomprehensible: $1.4 trillion and growing. That’s primarily for the mammoth data centers and high-powered chips required to meet what the company sees as insatiable demand for its technology. For now, OpenAI is a cash-burning machine going up against tech’s megacaps and their chip suppliers, drawing comparisons to earlier waves of high-growth tech firms that spent heavily for years to challenge behemoth incumbents, but to mixed results.
“OpenAI has a very big role in the in the history of the development of artificial intelligence, and will forever have that role,” said Gil Luria, an equity analyst at D.A. Davidson, in an interview. “Now, will that role be Netscape, or will it be Google? We’ve yet to find out.”
Nvidia CEO Jensen Huang speaks at an event ahead of the COMPUTEX forum, in Taipei, Taiwan, June 2, 2024.
Ann Wang | Reuters
It’s a position that would’ve been hard to imagine in 2016, when Nvidia CEO Jensen Huang hauled a black DGX-1 supercomputer up to OpenAI’s offices in San Francisco’s Mission District. The $300,000 machine had cost Nvidia “a few billion dollars” to develop, and there were no other buyers, Huang recalled recently on Joe Rogan’s podcast.
Musk, at OpenAI, was the only one who wanted it.
When Musk told him it was for “a nonprofit company,” Huang said all the blood drained from his face at the thought of parking such a costly box inside an organization that wasn’t meant to make money.
Behind the scenes, though, the nonprofit ideal was already under intense strain, and Musk didn’t like what he saw.
“Guys, I’ve had enough. This is the final straw,” Musk wrote in an email to his co-founders in 2017. He warned that he would “no longer fund OpenAI” if it turned into a tech startup instead of a nonprofit. Altman wrote back the next morning: “i remain enthusiastic about the non-profit structure!”
Altman vs. Musk
In February of the following year, Musk left the OpenAI board, and said at the time the move was to avoid a potential conflict of interest as his car company, Tesla, dove deeper into AI.
The story was more complicated.
Musk sued OpenAI and Altman in early 2024, alleging they abandoned the company’s founding mission to develop AI “for the benefit of humanity broadly,” and he’s regularly criticized OpenAI’s close ties to Microsoft, its principal backer. He also went to court to try and keep OpenAI from converting into a for-profit entity and, earlier this year, went so far as to try and acquire the AI lab for $97.4 billion.
In October, OpenAI announced it had completed a recapitalization, cementing its structure as a nonprofit with a controlling stake in its for-profit business, which is now a public benefit corporation called OpenAI Group PBC.

Musk isn’t the only early OpenAI team member who’s turned into a bitter rival. Siblings Dario and Daniela Amodei left OpenAI in late 2020 to form Anthropic, which said last month that Microsoft and Nvidia would invest in the company. The valuation from the funding round could reach as high as $350 billion.
Anthropic’s Claude family of large language models is one of the biggest competitors to OpenAI’s GPT models.
Altman is wagering that he can win the race by outspending the competition. While his company has sketched out plans for a trillion-dollar-plus AI infrastructure outlay, Anthropic has made roughly $100 billion in recent compute commitments, spaced out at various intervals over the next few years.
It all amounts to a giant bet that demand for AI services will continue apace.
“We’ve got all the various AI vendors making these huge capital investments,” said David Menninger, executive director of software research at ISG. “There’s a question as to how long those capital investments continue and whether or not they all pan out.”
Luria says Anthropic and others are making reasonable commitments based on their current growth trajectory and the funding they’ve already secured. But he said OpenAI’s approach has been based on a “fantastical set of commitments” with a “faint belief that those numbers are even possible.”
‘Pretty extreme’
Altman told CNBC in an interview on Thursday that OpenAI is already seeing enough demand to justify its spending plans, which “makes us confident that we will be able to significantly ramp revenue.”
“It’s obviously unusual to be growing this fast at this kind of scale, but it is what we see in our current data,” Altman said, adding that “the demand in the market is pretty extreme.”
Altman said last month that he expects annualized revenue to hit $20 billion by the end of this year and to reach hundreds of billions by 2030. Its historic pace of growth has been a big boon for major tech companies.
Oracle signed a roughly $500 billion deal to sell infrastructure services to OpenAI over five years. Chipmakers Advanced Micro Devices and Broadcom have woven OpenAI-linked demand into multi-year forecasts.
But Oracle’s shares plunged 11% on Thursday after the software vendor reported weaker-than-expected revenue, a miss that dragged down Nvidia, CoreWeave and other AI-related stocks. Despite a surge in long-term contract commitments from companies like OpenAI, Meta, and Nvidia, investors are growing concerned about Oracle’s debt load that’s fueling its buildout.

Still, venture capitalist Matt Murphy of Menlo Ventures, said that in his 25 years in the venture business, “this is the mother of all waves.”
Murphy, an early investor in Anthropic, said the combination of AI models, custom chips and hyperscale data centers adds up to the potential for trillion-dollar outcomes. That explains the eye-popping level of capital expenditures and the astronomical valuations, he said.
Altman recently declared a “code red” inside his company, and shuffled resources to focus on making ChatGPT faster, more reliable and more personal, while delaying work on ads, health and shopping agents and a personal assistant called Pulse. His declaration came after Google released its Gemini 3 model last month, further accelerating the search giant’s ascent in the market.
On Thursday, OpenAI unveiled ChatGPT-5.2, a faster, more capable reasoning model that the company says is its best system yet for everyday professional use. It also struck a three-year, $1 billion content and equity deal with Disney around the Sora AI video generator.
Altman downplayed the threat from Google, telling CNBC that Gemini had less of an impact on the company’s metrics than OpenAI initially feared.
“I believe that when a competitive threat happens, you want to focus on it, deal with it quickly,” Altman said.
He said he expects the company to exit code red by January.
— CNBC’s Kif Leswing contributed to this report.

Technology
Broadcom stock reverses lower on a misinterpretation of what the CEO said on the earnings call
Published
5 hours agoon
December 12, 2025By
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Broadcom on Thursday evening reported another strong quarter and better-than-expected guidance for the current quarter. Nonetheless, the Club stock gave up its initial pop and traded sharply lower as the Q & A session of the post-earnings conference call kicked off. Investors were apparently not satisfied with CEO Hock Tan’s answer to an important question. Revenue in the fiscal 2025 fourth quarter, which ended Nov. 2, increased 28% year over year to $18.02 billion, ahead of the $17.49 billion consensus forecast, according to the consensus of analyst estimates compiled by LSEG. Adjusted earnings per share increased 37% to $1.95, also outpacing expectations of $1.86, LSEG data showed. Adjusted EBITDA , or earnings before interest, taxes, depreciation, and amortization, grew 34% to $12.22 billion in the quarter, beating the FactSet consensus of $11.61 billion. Why we own it Broadcom is a high-quality semiconductor and software company run by the incredible CEO Hock Tan. The company is a big AI beneficiary through its networking and custom chip businesses. Competitors : Marvell Technology, Advanced Micro Devices , and Nvidia Last buy : Nov. 21, 2024 Initiation date : Aug. 24, 2023 Bottom line The reported results were solid as revenue outpaced expectations, thanks to strength in both of Broadcom’s operating segments: Semiconductor Solutions and Infrastructure Software. Profit margin performance was also strong as the company’s overall adjusted operating income margin expanded nearly 350 basis points, or 3.5 percentage points, leading to strong year-over-year earnings growth, beyond what the Street was looking for. Alongside the strong results, revenue and EBITDA margin guidance for the current fiscal 2026 first quarter were both ahead of expectations as well. Before addressing the part of the call that knocked the stock, we want to stress that, overall, Tan’s remarks got us really excited for 2026. For starters, the CEO confirmed the rumors that the fourth customer we heard about last call, which placed a $10 billion order, is indeed Anthropic, and that they’re buying the Ironwood XPUs, the generation seven TPUs on which Google’s Gemini 3 was trained and run. XPU is the term Broadcom uses to describe custom chips, which are also referred to as application-specific integrated circuits (ASICs). Tan also noted that these TPUs are being used by others, including Club name Apple , Cohere, and SSI, adding that the “scale at which we see this happening could be significant.” TPUs, or tensor processing units, are what Google calls the chips that it co-designed with Broadcom. In a “what have you done for me lately” business, Tan also noted that in the reported quarter, privately held Anthropic doubled down, placing an additional $11 billion order for delivery in late 2026. If that’s not enough, Tan said Broadcom secured a $1 billion initial order from a fifth, yet-to-be-named XPU customer, also for delivery in 2026. It was noted on the call, however, that in the back half of fiscal 2026, there could be some margin pressure. CFO Kirsten Spears said, “[In] the second half of the year, when we do start shipping more systems, the situation is straightforward. We’ll be passing through more components that are not ours. … Those costs will be passing through more costs within the rack. And so those gross margins will be lower.” So, that brings us back to the question: Why did a stock, which initially jumped over 3% on the release, proceed to give up the gains and reverse lower by 4.5% in the after-hours session? It’s about concerns regarding the long-term partnership between Broadcom and Google-parent Alphabet , and maybe that back-half margin talk. The Q & A part of the call kicked off with a question about XPU customers possibly looking to bring more development in-house and what that might mean for Broadcom in the coming years. Tan responded by discussing the benefits of custom semiconductors, noting that what can be built into purpose-designed hardware would only be possible to code via software with other solutions. He then went on to opine, saying, “Now, will that mean that over time they all want to go do it themselves? Not necessarily. And in fact, because the technology in silicon keeps updating, keeps evolving. And if you are an LLM [large language model] player, where do you put your resources in order to compete in this space, especially when you have to compete at the end of the day against merchant GPUs, which are not slowing down in the rate of evolution. So, I see this concept of customer tooling as an overblown hypothesis, which frankly, I don’t think will happen.” Customer tooling refers to the idea that companies look to develop their own, in-house designed, custom hardware accelerators for AI training and inference without the help of Broadcom. Tan’s reference to GPUs, or graphics processing units, was meant to highlight the competitive landscape that customer chips face from these gold-standard all-purpose chips, dominated by Club name Nvidia . Sellers of stock may have taken Tan’s remarks to be a bit dismissive and not quite the concrete “it’s not happening” answer they had been hoping for. That said, we appreciate Tan because he provides a no-nonsense view of things, regardless of what he thinks Wall Street wants to hear. At the moment, this hypothesis is indeed nothing more than speculation, and Tan was, in our opinion, clear in his view that he doesn’t see this scenario playing out. In the end, Thursday’s after-hours selloff was more about investor concern with a potential bearish scenario in the future, in which key customers move development in-house, rather than anything clear-cut that would impact Broadcom’s business outlook. It’s an understandable concern, after all, we have seen those with the financial ability to do so, look to move more chip development in-house. However, it is nothing more than speculation at the moment and, in our opinion, not nearly enough to get out of our position, given the clearly strong demand that Broadcom is now seeing and expects to see increase as we work our way through 2026. If the margin commentary was why the stock was down, it’s an opportunity because at the end of the day more business, even at a lower gross margin, means more earnings growth. And that is what we value the stock based on. AVGO YTD mountain Broadcom YTD That said, even just the possibility of hiccups down the road was enough to drive a move lower in the stock when investors are sitting on huge gains, especially in the middle of December, and looking to book profits before year-end. Broadcom shares, as of Thursday’s close, were up 75% year-to-date, and trading right around all-time highs coming into the print. This decline doesn’t strike us as anything more than that. Out of respect for this year’s rally, we’re reiterating our 2 rating hold on Broadcom stock and will look for a better opportunity to upgrade it to our buy-equivalent 1 rating should this selloff persist in the coming sessions. We are, however, raising our price target to $425 per share from $415, as Wednesday’s record-high close of nearly $413 was bumping up on our previous PT. Segment commentary Broadcom’s fiscal fourth-quarter revenue in Semiconductor Solutions, the much larger of the two operating segments, increased 34.5% year over year to $11.07 billion, exceeding expectations of $10.77 billion, according to FactSet. Within that result, AI semiconductor revenue surged 74% year over year to $6.5 billion, ahead of the $6.22 billion the team guided to months ago after its fiscal Q3 release. AI networking was again strong, with Tan noting that customers continue to build out data center infrastructure before they deploy AI accelerators. As a result, the backlog for AI switches now exceeds $10 billion, with the CEO adding that the Tomahawk 6, which he considers unmatched in its capabilities, is seeing bookings come in at record rates. Adding in the other components necessary to build out an AI data center, including XPUs, and Broadcom is looking at an AI-related backlog of more than $73 billion — about $53 billion of which is XPUs. Tan expects the team to convert that into realized revenue over the next 18 months, with $8.2 billion expected to be realized in the current fiscal 2026 first quarter. Regarding the legacy semiconductor sub-unit, fiscal Q4 revenue of $4.6 billion represented a 2% year-over-year increase and 16% sequential increase, “based on favorable wireless seasonality,” Tan said. That seasonality he’s referring to is the launch of the iPhone 17, which has been met with solid demand. Tan added that broadband revenue continues to recover, wireless was flat versus the year-ago period, and enterprise remains under pressure as “spending continued to show limited signs of recovery.” In Broadcom’s other operating segment, Infrastructure Software , revenue grew about 19% year over year to $6.9 billion, ahead of the $6.72 billion consensus estimate, according to FactSet. On the call, Tan said, “Bookings continued to be strong as total contract value booked in Q4 exceeded $10.4 billion, versus $8.2 billion a year ago.” As a result, the software infrastructure backlog ended the quarter at $73 billion, a major increase from the year-ago $49 billion. Guidance For its fiscal 2026 first quarter, which will end on Feb. 1, Broadcom forecasted total revenue to be about $19.1 billion. That target is ahead of the $18.27 billion LSEG consensus. Importantly, AI revenue is expected to keep growing in the coming quarter, with Tan stating in the release, “We see the momentum continuing in Q1 and expect AI semiconductor revenue to double year-over-year to $8.2 billion, driven by custom AI accelerators and Ethernet AI switches.” Add in the legacy semiconductor business forecast of approximately $4.1 billion, and we get a Semiconductor Solutions segment guide of about $12.3 billion, well ahead of the $11.53 billion consensus forecast, according to FactSet. The $6.8 billion Infrastructure Software revenue guide for fiscal Q1, however, came in short of the $7.136 billion estimates from FactSet. The company expects fiscal Q1 adjusted EBITDA to be approximately 67% of projected revenue, or $12.78 billion, ahead of the 66% profit margin and $12.06 billion consensus estimate, according to FactSet. (Jim Cramer’s Charitable Trust is long AVGO, AAPL, NVDA. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
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