Broadcom shares were higher in early trading on Monday, putting the stock on track for a gain of about 40% in December after one of Wall Street’s top analysts once again raised its price target on the artificial intelligence chip maker.
Broadcom (AVGO) In terms of market capitalization, shares topped the $1tn mark this month, with the group continuing to benefit from its market leadership in custom AI chips and as a potential partner for hyperscalers looking to design their own processors to get out of trouble role. (NVDA) .
Amazon (Amazon) Google parent company Alphabet (Google) and microsoft (Microsoft Corporation) are cooperating with Broadcom to develop customized artificial intelligence infrastructure, and reports indicate that Apple (AAPL) is seeking to partner with the Palo Alto, California-based group to develop its Baltra AI server chip.
Broadcom also makes specialized networking equipment that determines how quickly information collected on one network can be transferred to the next.
Overall, the group expects the available size of these markets to increase to $60 billion to $90 billion over the next three years.
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Chief Executive Hock Tan told investors on a conference call earlier this month: “We are well positioned to seize this opportunity and gain leading market share, and expect this to drive our 2024 AI revenue base of $12.2 billion. strong growth.
Optimistic about the prospects of the artificial intelligence market
The prospect triggered a series of upgrades to Broadcom stock from Wall Street analysts, including UBS Group AG’s Timothy Arcuri, who raised his price target by $50 in a note released on Monday. , to $270 per share.
“After reviewing Broadcom’s serviceable addressable market (SAM) disclosures and reassessing the likely results for its custom computing and AI networking businesses, we are increasing our AI forecast for FY26/FY27,” Accuri and her team said. Revenue estimates were raised by approximately 20% and 40% respectively.
Broadcom told investors on December 12 that artificial intelligence revenue in the first fiscal quarter ending in December is expected to increase 65% from last year to $3.8 billion. In comparison, its overall chip sales growth rate was 10%, or revenue of $14.6 billion.
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“Even with these higher estimates, given our mid-range market share assumptions and the strong likelihood of significant SAM expansion if Broadcom adds two additional hyperscale extenders to its AI customer base, we remain optimistic,” Accuri said. I think there is still room for growth.
Bloomberg reported earlier this week that Apple is about to build an in-house chip for its Bluetooth and WiFi connectivity under a project called Proxima.
More artificial intelligence stocks:
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- Cathie Wood buys $30M in low-profile AI stock
At the same time, technology website The Information reported that Broadcom is working with iPhone manufacturers to develop artificial intelligence processing chips using TSMC’s N3P processing platform.
Broadcom shares rose 2% in premarket trading, opening at $225.12 per share.
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