Broadcom's stock surges 21%, propelling the company above a $1 trillion market capitalization for the first time.

• On Friday, Broadcom's stock price increased by more than 21%, causing its market value to surpass $1 trillion for the first time.
• The company reported a 220% increase in AI revenue, reaching $12.2 billion for the year.
• In the fourth quarter, Broadcom generated $14.05 billion in revenue, representing a 51% increase compared to the previous year.

If the move holds until the closing bell, Friday morning saw shares of Broadcom pop more than 21%, pushing the company's market cap beyond $1 trillion for the first time. This would be Broadcom's best trading day on record.

The company's fourth-quarter results exceeded Wall Street's expectations for earnings and demonstrated robust growth in artificial intelligence revenue.

Broadcom's semiconductor solutions group, which includes its AI chips, generated $8.23 billion in revenue in the fourth quarter, up 12% from the previous year. However, the company's overall revenue of $14.05 billion fell short of the $14.09 billion analysts had predicted, according to LSEG.

The company's AI revenue increased by 220% to $12.2 billion for the year, and the stock price rose in after-hours trading on Thursday following a statement from Broadcom CEO Hock Tan about the company's plans to create custom AI chips with major cloud customers.

Broadcom's net income increased by 23% to $4.32 billion, or 90 cents per share, from $3.52 billion, or 83 cents per share, in the same quarter the previous year.

Analysts at Bernstein wrote in a Friday note that Tan might look good in a leather jacket, referencing CEO Jensen Huang's signature style. Despite nerves ahead of Thursday's results, Broadcom's fourth-quarter earnings were deemed "decent," and analysts were encouraged by management's near-term and longer-term vision for AI.

The stock's price target was increased by the analysts from $195 to $250.

The AI story is gaining momentum, according to the analysts.

Bank of America analysts maintained their buy rating on the stock due to its growing AI potential. While Broadcom currently leads the market for internal workload chips, they warned of competition from NVDA's dominance in merchant silicon and enterprise customers.

Broadcom's commentary on AI is expected to increase long-term excitement about the company, according to Morgan Stanley analysts. They predict that Broadcom will continue to be a top way to invest in AI semiconductors over the next two to three years.

The quarter's relief from low nearer-term expectations and the long-term commentary on AI will further fuel excitement for custom AI chip prospects, which were already at a high level, according to analysts in a Friday note.

-- Michael Bloom and Kif Leswing contributed to this report