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

In March this year, Broadcom withdrew the offer that would have been the largest technology deal ever, saying: “Qualcomm was clearly a unique and very large acquisition opportunity.”

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

Broadcom shares rose 24% on Friday, their best day ever, pushing the company’s market capitalization above $1 trillion for the first time. The chip maker became the eighth member of the 13-figure tech club. Since the company abandoned its Qualcomm bid, Broadcom shares have risen more than 760%, outpacing Qualcomm’s 165% gain. The S&P 500 is up 119%.

At the time of the announced takeover effort, Broadcom’s official headquarters was in Singapore, which addressed the Trump administration’s concerns. Broadcom applied to move to the US, but Trump blocked the deal anyway.

Still, Broadcom CEO Hock Tan didn’t let that stop him from making big changes. Far from it.

Broadcom has since closed three deals worth $10 billion or more, venturing well beyond its core semiconductor market. In July 2018, the company agreed to acquire legacy software provider CA Technologies for $19 billion, and in August 2019 it acquired security software company Symantec for $10.7 billion.

Tan’s biggest bet came in 2022, when Broadcom announced it would buy VMware for $61 billion, entering the server virtualization market. The deal took 18 months to close and is only experiencing delays Microsoft’s Activision Blizzard’s $68.7 billion acquisition and Dell’s $67 billion purchase of EMC are on the list of the biggest tech deals of all time.

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

Broadcom reported better-than-expected profit in its latest quarterly earnings report on Thursday, although revenue fell just short of estimates. Broadcom’s artificial intelligence business has boosted overall growth to levels typically reserved for companies a fraction of its size.

In the fiscal fourth quarter, AI revenue increased 150% to $3.7 billion, with some of that growth coming from Ethernet networking components used to connect thousands of AI chips.

This resulted in a 51% increase in total revenue to $14.05 billion. Broadcom’s infrastructure software division generated revenue of $5.82 billion in the quarter, nearly tripling the year-earlier figure of $1.97 billion, a figure that included a big boost from VMware.

Broadcom hasn’t quite been able to keep up with the AI ​​boom Nvidiawhose graphics processing units are used to train and operate the most powerful AI models. Nvidia’s market cap is up over 170% this year to $3.3 trillion, a close second Apple and Microsoft among the most valuable listed companies in the world. Broadcom’s value has doubled this year.

Although Broadcom lags behind Nvidia, it has still positioned itself for strong growth at a time when the former chip giant dominated the company Intel is staff reductions and restructuring. It is also far exceeded Advanced micro deviceswhich is worth $206 billion after falling 14% this year.

Broadcom refers to its custom AI accelerators as XPUs, which are different from the GPUs that Nvidia sells. Broadcom said it has doubled shipments of XPUs to “our three hyperscale customers.” The company does not name the customers, but analysts believe there are three 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 following this week’s earnings report. The company recommends buying Broadcom shares and raised its 12-month target to $250 from $225. The stock closed at $224.80 on Friday.

The company that exists today as Broadcom is the result of a merger between Avago, which was formed from Agilent Technologies in 2005, and Broadcom, which was founded in Southern California in 1991. While Avago was the acquiring company, the combined company took over the company name: Broadcom. Tan, who was named Avago’s CEO in 2006, was tasked with leading the company.

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

The company’s market capitalization exceeded $100 billion in 2018, with wired infrastructure 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 the addition of VMware has seen infrastructure software’s share of revenue rise from 21% of revenue in last year’s October quarter to 41% in the just-ended period. Even without VMware, Broadcom said its business grew 90% compared to the previous year.

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

Broadcom’s market opportunity continues to grow due to the computing needs of large language models built and deployed by the largest technology companies, Tan told Cramer in September.

“Each new generation LLM requires multiple times – 2-3x, maybe even more – of computing power every time and every year,” Tan said. “You can imagine this being a driver of ever-increasing computing capabilities, most of which will be leveraged by XPUs.”

Alphabet, AmazonAccording to technology research firm Futuriom, Meta and Microsoft spent a combined $58.9 billion on capital expenditures last quarter. This represented growth of 63% and represented approximately 18% of total sales.

Broadcom’s unique selling point in the market is that it makes very expensive custom chips for AI for the world’s top technology companies, with the promise of helping them move 20% to 30% faster and use 25% less power, Harsh Kumar said , analyst at Piper Sandler, 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 a… oracle to be able to use these chips,” Kumar said. “These chips are not intended for everyone.”

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