Broadcom’s AI Surge: Why This Chip Giant Defied Market Gravity on Monday
Semiconductor heavyweight Broadcom (AVGO) rode the AI wave to outpace the broader market—again. Here’s what fueled the rally.
The AI tailwind: Fresh analyst notes highlight Broadcom’s custom AI chip dominance, with whispers of a monster backlog for next-gen accelerators. No surprise—every hyperscaler wants a piece of the action.
Earnings halo effect: Last quarter’s bullish guidance still echoes, with CFOs somehow keeping a straight face while forecasting ‘modest double-digit growth’ in AI revenue. Cue the institutional buying frenzy.
Short squeeze spice: Bears betting against the AI hype train got steamrolled—again. Short interest dipped as the stock climbed, proving Wall Street’s favorite sport remains kicking skeptics while they’re down.
Funny how ‘disruptive AI narratives’ always seem to align with executive stock vesting schedules. Just saying.
Making an elite list
That morning,selected 15 out of 85 stocks filtered by its proprietary screener to be top picks. Specifically, it feels that such picks are in the upper 25% of companies in their peer group in terms of growth and the quality of their operations.
Image source: Getty Images.
One of them was Broadcom, which in terms of market capitalization is the No. 2 out of the chosen stocks (first place belonged to Google parent).
Broadcom is on many analyst and investor watch lists due to its position as a key supplier of the chips that power AI functionalities. There is a deep, almost inexhaustible demand for such technology at the moment, and that's helping to power the company's fundamentals notably higher.
A tech trend that really has legs
We shouldn't count on that trend sputtering or even slowing down to much of an extent. Late last year CEO Hock Tan opined that the thirst for AI could drive the processor market for that segment to $60 billion and $90 billion in sales within a few short years. Considering that Broadcom's already-impressive take from such goods was slightly over $12 billion, it's standing in front of a huge opportunity.
