Broadcom CEO Hock Tan.
Lucas Jackson | Reuters
After topping $1 trillion in market cap on Friday and soaring 24% for its best day on record, Broadcom’s stock jumped another 11% on Monday, driven by increased price targets from Wall Street.
The latest rally was spurred by Broadcom’s better-than-expected earnings report late Thursday, and an uplifting outlook for the first quarter. Broadcom, which sells semiconductors and infrastructure software, is seeing soaring demand from the boom in generative artificial intelligence and reported a 220% jump in AI revenue for the year to $12.2 billion.
Goldman Sachs analysts, who recommend buying Broadcom shares, lifted their 12-month target to $240 from $190, citing additional large customers for custom silicon. They also referenced management’s execution following the $61 billion purchase of VMware, which closed last year.
“We now have even higher conviction on the company’s forward revenue and earnings growth outlook,” the analysts wrote in a report dated Dec. 15.
Barclays raised its priced target on the stock to $205 from $200, while Truist raised its call to $260 from $245.
Broadcom shares are now up 126% for the year, closing at $250 on Monday. Nvidia, which has been the primary beneficiary of the AI craze due to the popularity of its graphics processing units, or GPUs, is up more than 165% this year, reaching a market cap of $3.2 trillion. The Nasdaq has gained 34%.
Broadcom refers to its custom AI accelerators as XPUs, which are different than the GPUs Nvidia sells. Broadcom said it doubled shipments of XPUs in the quarter to “our three hyperscale customers.” The company does not name the customers, but analysts say the three are Meta, Alphabet and TikTok parent ByteDance.
