Broadcom's Bright Future in AI Semiconductor Market

According to Bernstein, soaring demand for artificial-intelligence semiconductors is positioning Broadcom for a promising future.

In a recent conversation with CEO Hock Tan, analyst Stacy Rasgon reaffirmed his Outperform rating on Broadcom stock, setting a price target of $1,250. Rasgon highlighted Tan's enthusiasm regarding the emergence of AI and its vast potential.

Shares of Broadcom saw a modest rise of 0.2% to $1,103 in early trading on Friday.

Broadcom holds a dominant position in the high-end AI ASIC market, assisting major companies like Google's Alphabet in designing custom AI chips.

Rasgon emphasized Tan's confidence in Broadcom's ability to develop cutting-edge AI chip technology, surpassing its Asia-based competitors. Tan stressed the company's extensive intellectual property, strong business partnerships, and valuable customer relationships. Additionally, he hinted at the possibility of achieving higher pricing for future chip designs.

Broadcom's semiconductor products span various categories, including networking, broadband, server storage, wireless, and industrial applications.

Recently, Tan stated that generative-AI-related demand is rapidly accelerating, and the company's chip business is increasingly driven by investments in accelerators and network connectivity for AI by hyperscalers.

Over the past year, Broadcom's shares have surged approximately 90%, outperforming the 45% rise of the iShares Semiconductor exchange-traded fund, which tracks the performance of the ICE Semiconductor Index.