Among the abundant number of sectors, but among the herd there stands one sector which always has investors looking hungry all the time. As the semiconductor sector heats up, semiconductor stocks have witnessed some vast gains over the years. With that, the latest trend binding the industry is Artificial Intelligence (AI). After the breakthrough of OpenAI’s ChatGPT, AI has been the talk of the town leading to companies like NVIDIA (NASDAQ:NVDA) being on a historic bull run.
With this let us take a look at Broadcom and why it is surging this Thursday.
The American multinational semiconductor and infrastructure software producer Broadcom (NASDAQ:AVGO) sees its stock surge more than 12% today after a few note-worthy events like delivering better-than-expected results, positive development on AI, and stock split news.
Stellar Results Backed By Strong AI Demand
The company posted its results today with revenue standing up to $12.49 billion, up 43% YoY and well above analyst estimates of $12.04 billion owing to outperforming market expectations on its AI demand as it reached a record high of $3.1 billion during the quarter. Management event raised its AI revenue from $10 billion to $11 billion for 2024 and total revenue to $51 billion from $50 billion previously forecasted.
Earnings came to $2.12 billion or $4.42 per share missing estimates of $2.26 billion or $4.97 per share.
Additionally, the company is now considering custom chip production for tech giants Google (NASDAQ:GOOG) and Meta (NASDAQ:META) as it looks to attract orders from cloud providers and reduce the market’s dependency on Nvidia.
Stock Split and Raised Price Targets
The company has also announced a 10-for-1 stock split in an attempt to make the share much more accessible for retail investors and employees. Shareholders will receive 9 extra shares for each share they hold as split-adjusted trading commences on July 15.
The move comes after its stock has gained more than 30% this year after nearly doubling in 2023.
The news has analysts going gaga over the stock as they raise their targets and rating for the semiconductor giant. Deutsche Bank has upgraded its target from $1,500 to $1,900 reflecting a 13.23% upside while maintaining its “Buy” rating.
Bank of America (NYSE:BAC) analyst has also raised its target from $1,680 to $2,000, signifying close to 20% upside from current levels. Goldman Sachs (NYSE:GS) has elevated its target to $1,900 and sees Broadcom as a critical piece for AI infrastructure build-up and claims the stock to outperform estimates.
Stocks.News have positions in Google and Meta.
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Ruchi
Author
Ruchi is a financial writer covering the US stock market. She is located in New Zealand but has been following and analyzing American public companies for more than 15 years. Previously, she worked at Businessday Nigeria and has written content for MarketRealist, Benzinga and Zacks Investment Research among others.