Broadcom (AVGO) stock gapped up on Thursday as investors reacted positively to the company’s beat-and-raise earnings report and upcoming 10-for-1 stock split.
Nvidia and Qualcomm power much of the world’s technology. And with 750 chipmakers building the brains and the insides of our digital devices, competition in the sector has never been hotter. These companies and AI stocks are also a huge force on Wall Street and generate big price moves in the market. So what do investors need to know about this critical industry?” vid-name=”Semiconductor Stocks: How The AI Chip Boom Is Priming The Sector For Growth” vid-cat=”Industry Insights” vid-date=”11/29/2023″ vid-date-tmsp=”1701255670″ vid-image=”https://www.investors.com/wp-content/uploads/2023/11/semi-640×360.jpg” vid-authors=”MEREDITH HEYMAN”>
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At least 18 Wall Street firms raised their price targets on Broadcom stock after the company’s quarterly report late Wednesday.
Jordan Klein, a trading desk analyst with Mizuho Securities, said Broadcom’s report will fuel more FOMO (“fear of missing out”) trading in AI hardware stocks.
In a client note Thursday, Klein called out AI chip leader Nvidia (NVDA) and networking gear maker Arista Networks (ANET) as other beneficiaries of the FOMO trade. He also named memory-chip maker Micron Technology (MU) as an additional beneficiary.
Broadcom Stock Pops After Report
In midday trades on the stock market today, Broadcom stock jumped 13.4% to 1,695.90. Earlier in the session, it hit a record high 1,735.85.
Meanwhile, Nvidia stock climbed 3% to 128.93. Arista advanced 4.4% to 324.97. Micron rose 2% to 143.54.
Broadcom “remains a must-own name in AI, given it is the true leader in non-GPU (graphics processing unit), custom AI silicon,” Klein said. “No one is even close to their capabilities nor can match their deep existing relationships with most of the large cloud hyperscalers.”
Broadcom also offers critical high-speed networking products for AI data centers, Klein said.
In a client note Thursday, BofA Securities analyst Vivek Arya called Broadcom a “top 2 AI pick” with Nvidia.
Arya reiterated his buy rating on Broadcom stock and upped his price target to 2,000 from 1,680. The company’s 10-for-1 stock split will take effect on July 15.
Chipmaker Delivers ‘Mic Drop’ Report
Broadcom is positioned to grow in custom AI processors, Ethernet networking, and upsells for its VMware infrastructure software, Arya said.
Barclays analyst Tom O’Malley called Broadcom’s fiscal second-quarter report a “mic drop” report.
He maintained his overweight rating on Broadcom stock and raised his price target to 2,000 from 1,500.
Jefferies analyst Blayne Curtis said Broadcom’s AI revenue guidance for the full fiscal year “seems conservative.”
Broadcom now expects AI revenue of more than $11 billion, up from its prior estimate of over $10 billion. So far, in the first half of the year, Broadcom has raked in $5.4 billion in AI sales, so it’s “already halfway there,” Curtis said in a client note Thursday.
Curtis kept his buy rating on Broadcom stock and increased his price target to 2,050.00 from 1,550.
Broadcom stock is on two IBD lists: Big Cap 20 and Tech Leaders.
Follow Patrick Seitz on X, formerly Twitter, at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
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