Broadcom Inc. AVGO skyrocketed more than 20% during Friday morning trading, hitting all-time highs after its fiscal fourth-quarter earnings blew past Wall Street estimates.
The semiconductor giant's growth narrative is now turbocharged by a massive artificial intelligence (AI) opportunity, with analysts projecting a multibillion-dollar windfall in the years ahead.
The stock’s surge catapulted Broadcom into the exclusive trillion-dollar market cap club, placing it as the eighth-largest publicly traded company, just behind Tesla Inc. TSLA.
For context, the trillion-dollar elite is rarefied territory, shared only by the “Magnificent Seven” tech giants.
Is Broadcom The Eighth Magnificent Tech Stock?
| Name | Market Cap |
| Apple Inc. AAPL | $ 3.73 trillion |
| Microsoft Corporation MSFT | $ 3.33 trillion |
| NVIDIA Corporation NVDA | $ 3.31 trillion |
| Amazon.com, Inc. AMZN | $ 2.39 trillion |
| Alphabet Inc. GOOG GOOGL | $ 2.35 trillion |
| Meta Platforms, Inc. META | $ 1.57 trillion |
| Tesla, Inc. | $ 1.37 trillion |
| Broadcom Inc. | $ 1.02 trillion |
December To Remember: Broadcom Eyes Record Month Since IPO
With Friday’s spike, Broadcom's stock has already rallied 33% in December, marking its strongest monthly performance since going public in 2009.
The semiconductor heavyweight has now climbed an impressive 95% year-to-date, securing the title of the 10th-best-performing stock in the S&P 500 for 2024 thus far.
When considering combined returns for 2023 and 2024, Broadcom ranks seventh in the benchmark index.
Read Also: Nvidia, AMD, Taiwan Semi Gain As Broadcom’s Q4 Performance Sparks Sector-Wide Surge
| Name | Price Chg. % (YTD 2024) | Total Return (2023) | Combined Gains |
|---|---|---|---|
| Palantir Technologies Inc. PLTR | 325.31% | 167.45% | 1,112.89% |
| NVIDIA Corporation | 173.24% | 239.02% | 639.72% |
| Vistra Corp. VST | 279.37% | 70.73% | 508.67% |
| Meta Platforms, Inc. | 75.99% | 194.13% | 341.37% |
| Royal Caribbean Cruises Ltd. RCL | 88.63% | 161.97% | 371.64% |
| Super Micro Computer, Inc. SMCI | 26.46% | 246.24% | 324.29% |
| Broadcom Inc. | 94.99% | 104.18% | 296.19% |
| Axon Enterprise, Inc. AXON | 147.91% | 55.69% | 289.91% |
| Fair Isaac Corporation FICO | 88.05% | 94.46% | 292.80% |
| Arista Networks Inc ANET | 87.89% | 94.07% | 291.65% |
Why Analysts Love Broadcom
Bank of America’s analyst Vivek Arya reiterated a “Buy” rating on Broadcom following the quarterly report, boosting the 12-month price target from $215 to $250 and hinting at a potential 15% upside from current levels.
Arya’s optimism stems from three main drivers:
- AI’s Expanding Footprint: Broadcom’s custom AI chips (ASICs) now serve five major customers, up from three previously. The company's AI-related revenue could soar to a served available market of $60–$90 billion by 2027—up from an estimated $15–$20 billion in 2023.
- Apple's Steady Demand: Broadcom is expected to maintain its strong relationship with Apple, despite prior concerns about declining content orders.
- Robust Earnings Growth: Analysts forecast a 15% sales growth and a 20% adjusted earnings-per-share (EPS) growth trajectory through 2026, underpinned by Broadcom’s diversified portfolio spanning silicon and infrastructure software.
"Broadcom's AI-driven growth potential and diversified base position it as one of the best opportunities in the chip sector," Arya said in a note, justifying their upward revision of earnings per share in fiscal year 2025 and 2026 by 5% and 3%, respectively.
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© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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