Broadcom’s long and winding path to the trillion-dollar club, and how Trump played a role

Published

11 months ago

December 14, 2024

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President Donald Trump introduces Broadcom CEO Hock Tan prior to Tan announcing the repatriation of his company’s headquarters to the United States from Singapore during a ceremony in the Oval Office of the White House, in Washington, DC, November 2, 2017.

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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%.

Broadcom vs. Qualcomm

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 CEO Hock Tan sits down with Jim Cramer

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.

History of big deals

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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Technology

Figure AI sued by whistleblower who warned that startup’s robots could ‘fracture a human skull’

Published

5 hours ago

November 21, 2025

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$Figure AI sued by whistleblower who warned that startup's robots could 'fracture a human skull'$

Startup Figure AI is developing general-purpose humanoid robots.

Figure AI

Figure AI, an Nvidia-backed developer of humanoid robots, was sued by the startup’s former head of product safety who alleged that he was wrongfully terminated after warning top executives that the company’s robots “were powerful enough to fracture a human skull.”

Robert Gruendel, a principal robotic safety engineer, is the plaintiff in the suit filed Friday in a federal court in the Northern District of California. Gruendel’s attorneys describe their client as a whistleblower who was fired in September, days after lodging his “most direct and documented safety complaints.”

The suit lands two months after Figure was valued at $39 billion in a funding round led by Parkway Venture Capital. That’s a 15-fold increase in valuation from early 2024, when the company raised a round from investors including Jeff Bezos, Nvidia, and Microsoft.

In the complaint, Gruendel’s lawyers say the plaintiff warned Figure CEO Brett Adcock and Kyle Edelberg, chief engineer, about the robot’s lethal capabilities, and said one “had already carved a ¼-inch gash into a steel refrigerator door during a malfunction.”

The complaint also says Gruendel warned company leaders not to “downgrade” a “safety road map” that he had been asked to present to two prospective investors who ended up funding the company.

Gruendel worried that a “product safety plan which contributed to their decision to invest” had been “gutted” the same month Figure closed the investment round, a move that “could be interpreted as fraudulent,” the suit says.

The plaintiff’s concerns were “treated as obstacles, not obligations,” and the company cited a “vague ‘change in business direction’ as the pretext” for his termination, according to the suit.

Gruendel is seeking economic, compensatory and punitive damages and demanding a jury trial.

Figure didn’t immediately respond to a request for comment. Nor did attorneys for Gruendel.

The humanoid robot market remains nascent today, with companies like Tesla and Boston Dynamics pursuing futuristic offerings, alongside Figure, while China’s Unitree Robotics is preparing for an IPO. Morgan Stanley said in a report in May that adoption is “likely to accelerate in the 2030s” and could top $5 trillion by 2050.

Read the filing here: