Broadcom (NASDAQ: AVGO) is making some serious moves lately with its AI strategy, and honestly, it’s worth a look. They just wrapped up a big acquisition of VMware for $69 billion, and it’s changing the game for them. They’re diving into Infrastructure as a Service (IaaS) now, which is a big deal. It’s kind of like how Tesla is trying to make FSD a reality for robotaxis.

This VMware buy gives them a nice boost in their recurring revenue model, especially since they’re also in the semiconductor space. They’re really diversifying their business, which is smart, but are they too late to the party?

Financial Performance: A Closer Look

Now, let’s talk numbers. Broadcom’s semiconductor division raked in $8.23 billion, up 12% from last year. But that infrastructure software segment? It shot up to $5.82 billion, a staggering 196% increase. All told, Broadcom's revenue for the year jumped 51% to $14.05 billion, with net income climbing 23% to $4.32 billion.

Investors should be happy, especially since their free cash flow rose 16% year-over-year, hitting $5.48 billion, which is 39% of revenue. That’s cash they can use for buybacks and dividends, always a good thing in this economy.

The Buyback and Dividend Game

In fiscal year 2024, they tossed $5.2 billion into stock buybacks and returned $7.17 billion to shareholders via dividends. The dividends are nice, with a 1.17% yield, giving an annual payout of $2.12 per share. But they’ve upped the ante for fiscal year 2025 to $2.36 per share, which is their 14th straight annual increase.

When you compare that to Meta’s 0.32% dividend yield and $2 annual payout, you see where Broadcom's forward price-to-earnings ratio of 29.24 comes from. Investors expect a lot from them.

AI Revenue and Future Outlook

Now, about that AI revenue. It’s been a massive growth driver, contributing $12.2 billion to their total $51.6 billion revenue for FY24. That’s a whopping 220% growth year-over-year. And their custom accelerators, like the 3.5D XDSiP, are making it all possible by cutting latency and signal bandwidth.

Big players like Microsoft and Alphabet are cashing in on this, but AI products are still in the wild west phase. Sure, models like OpenAI's ChatGPT and Anthropic's Claude have potential, but you can't always rely on them. The next big thing likely involves text-to-video generation, which is going to demand a ton of computing power.

The Ceiling and Future of AI in Crypto

But there’s a ceiling coming, projected to hit by 2028. They’re looking at non-public data and simulations to keep the flow going. The global AI market size is expected to grow from $214.6 billion in 2024 to $1.3 trillion in 2030, which sounds fantastic, but that’s a lot of competition.

Nvidia (NASDAQ: NVDA) has been the king of the AI data center for a while, kind of like Bitcoin's first-mover advantage. Broadcom’s currently trading at $215.23 per share, right in line with Wall Street's median price target of $216.51. The high and low estimates are pretty wide at $260 and $160 per share.

A stock market correction seems likely, especially after BlackRock's CEO sold $50.4 million in BLK shares. If that happens, Broadcom might be worth a second look as one of the top AI data center and cybersecurity companies.

Summary: The Future is Uncertain

All in all, Broadcom's AI strategy bodes well for the future of AI-driven crypto trading platforms. It could make crypto trading algorithms more efficient, but can they keep up with the demand? Time will tell.