When Broadcom tried to buy rival Qualcomm for $120 billion in 2018, its efforts were thwarted. Qualcomm rejected the offer and the Trump administration declared the deal a potential threat to national security. 

In March of that year, Broadcom withdrew the bid, which would’ve been the largest technology deal on record, and said, “Qualcomm was clearly a unique and very large acquisition opportunity.”

As it turns out, Broadcom didn’t need it.

Broadcom shares soared 24% on Friday, their best day ever, and lifted the company’s market cap past $1 trillion for the first time. The chipmaker became the eighth member of tech’s 13-figure club. Since abandoning its Qualcomm offer, Broadcom shares are up more than 760%, trouncing Qualcomm’s 165% gain over that stretch. The S&P 500 is up 119%.

At the time of its announced acquisition effort, Broadcom’s official headquarters was in Singapore, which played into the Trump administration’s concerns. Broadcom filed to redomicile in the U.S., but Trump blocked the deal anyway.

Still, Broadcom CEO Hock Tan wasn’t deterred from taking big swings. Far from it.

Broadcom has since closed three deals valued at $10 billion or more, and it has ventured far outside of its core semiconductor market in the process. It agreed to acquire legacy software vendor CA Technologies for $19 billion in July 2018, and snatched up security software company Symantec for $10.7 billion in August 2019.

Tan’s biggest bet came in 2022, when Broadcom said it was buying VMware for $61 billion, jumping into the market for server virtualization. The deal took 18 months to close, and it trails only Microsoft’s $68.7 billion acquisition of Activision Blizzard and Dell’s $67 billion purchase of EMC on the list of biggest tech deals ever.

Broadcom “started as a semiconductor company and over the last six years, we kind of moved into infrastructure software, and that has gone very well,” Tan told CNBC’s Jim Cramer in a September interview. “The recent acquisition of VMware was essentially another step towards the direction of creating a very balanced mix between” chips and infrastructure software geared to the enterprise, he said.

Broadcom reported better-than-expected profit in its latest quarterly earnings report on Thursday, even as revenue came in just shy of estimates. Broadcom’s artificial intelligence business has lifted overall growth to rates typically reserved for company’s a fraction its size.

In the fiscal fourth quarter, AI revenue increased 150% to $3.7 billion, with some of that growth coming from ethernet networking parts used to tie together thousands of AI chips.

That drove an overall increase in revenue of 51% to $14.05 billion. Broadcom’s infrastructure software division generated $5.82 billion in revenue for the quarter, nearly tripling from last year’s $1.97 billion, a number that included a big boost from VMware.

Within the AI boom, Broadcom hasn’t quite kept pace with Nvidia, whose graphics processing units are being used to power the training and running of the most powerful AI models. Nvidia’s market cap has swelled by over 170% this year to $3.3 trillion, behind only Apple and Microsoft among the most valuable public companies in the world. Broadcom has doubled in value this year.

While trailing Nvidia, Broadcom has still positioned itself for hefty growth at a time that former chip titan Intel is downsizing and restructuring. It’s also far surpassed Advanced Micro Devices, which is valued at $206 billion after dropping 14% this year.

Broadcom refers to its custom AI accelerators as XPUs, which are different than the GPUs Nvidia sells. Broadcom said it doubled shipments of XPUs to “our three hyperscale customers.” The company doesn’t name the customers, but analysts say the three are Meta, Alphabet and TikTok parent ByteDance.

“The outlook for AI looks very bright for both GPUs and XPUs,” analysts at Cantor wrote in a note after this week’s earnings report. The firm recommends buying Broadcom shares and lifted its 12-month target to $250 from $225. The stock closed on Friday at $224.80.

The company that exists today as Broadcom is the product of a 2015 merger of Avago, which spun out of Agilent Technologies in 2005, and Broadcom, which was started in southern California in 1991. While Avago was the acquiring entity, the combined company took the name Broadcom. Tan, who was named CEO of Avago in 2006, was tapped to lead it.

Broadcom’s revenue in fiscal 2016 was $13.2 billion, and its biggest business was semiconductors for set-top boxes and broadband access.

The company’s market cap topped $100 billion in 2018, at which point wired infrastructure was still the primary source of revenue. Broadcom changed its financial reporting in late 2019 to focus on semiconductor solutions and infrastructure software, with the former accounting for about 73% of revenue in 2020.

But with the addition of VMware, infrastructure software has jumped from 21% of revenue in the October quarter last year to 41% in the period that just ended. Even excluding VMware, Broadcom said the business grew 90% from a year earlier.

The company said it expects infrastructure software revenue to increase 41% year-over-year in the current quarter to $6.5 billion while semiconductor revenue will rise by 10% to $8.1 billion. AI revenue will jump 65% year-on-year to $3.8 billion, the company said.

Broadcom’s market opportunity continues to grow because of the compute demands for large language models being created and deployed by the biggest tech companies, Tan told Cramer in September. 

“Each new generation LLM requires multiple x — 2-3x, maybe more — of compute, each time, each year,” Tan said. “You can imagine that’s a driver towards a larger and larger compute opportunity, which is going to be taken up largely by XPUs”

Alphabet, Amazon, Meta and Microsoft spent a combined $58.9 billion on capital expenditures in the latest quarter, according to tech research firm Futuriom. That represented 63% growth and equaled about 18% of aggregate revenue.

Broadcom’s differentiator in the market is that it’s making very expensive custom chips for AI for the world’s top tech companies with the promise of helping them move 20% to 30% faster and use 25% less power, Piper Sandler analyst Harsh Kumar told CNBC’s “Squawk on the Street” on Friday.

“You have to be a Google, you have to be a Meta, you have to be a Microsoft or an Oracle to be able to use those chips,” Kumar said. “These chips are not meant for everybody.”

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