AI-driven Broadcom (AVGO.US) stock price hits new high, with several Wall Street firms raising their price targets

On Friday, Broadcom (AVGO.US) saw its market capitalization surpass $1 trillion for the first time, surging 24% on the day, setting a record single-day gain. On Monday, the stock rose over 11% to close at $250, driven by Wall Street firms raising their price targets.

The latest rise in Broadcom's stock price was fueled by its better-than-expected earnings report released late Thursday and an upbeat outlook for the first quarter. As a supplier of semiconductors and infrastructure software, Broadcom has benefited from the explosive growth of generative AI. This year, the company's AI-related revenue has grown by 220% to $12.2 billion.

Analysts at Goldman recommended investors buy Broadcom shares and raised their 12-month price target to $240 from $190, noting the company added several large customers for its custom silicon products and highly praised its execution since completing the acquisition of VMware for $61 billion last year. "We have higher confidence in the company's future revenue and earnings growth prospects," they said.

Barclays raised its price target to $205 from $200, while Truist raised its target to $260 from $245.

As of Monday, Broadcom's stock price this year has risen more than 126%, while another AI powerhouse, Nvidia (NVDA.US), has gained more than 165% this year, with a market capitalization of $320 billion, compared with a 34% gain for the Nasdaq index for the year.

Broadcom calls its custom AI accelerators XPU, which is different from the GPUs sold by Nvidia. The company said shipments of XPU doubled in the fourth quarter, with three large hyperscale customers. While the company did not reveal the specific customers, analysts generally believe the three are Meta (META.US), Alphabet (GOOGL.US, GOOG.US) and ByteDance, the parent of TikTok.

Broadcom's AI strategy and its XPU technology, along with strong market demand, have created significant growth momentum. In the backdrop of the rapid development of generative AI, Broadcom and other industry giants such as Nvidia are expected to continue benefiting from this trend.