When Nvidia Wins, Broadcom Climbs: AI Boom Sends Chip Stocks Soaring

Broadcom Inc‘s AVGO stock is trading higher Thursday, coinciding with Nvidia Corp’s NVDA upbeat quarterly results.

Nvidia reported first-quarter revenue of $44.1 billion, up 69% year-over-year and 12% from the fourth quarter. The revenue beat a Street consensus estimate of $43.2 billion.

Excluding the charges related to restrictions on chip sales to China, Nvidia said adjusted earnings would have been 96 cents per share.

Nvidia is guiding second-quarter revenue of $45 billion, +/- 2%.

Also Read: Broadcom Unveils Next-Gen Optical Chip Tech To Power AI Data Centers

Broadcom Benefits

China accounted for 20.3% of Broadcom’s revenue in fiscal 2024, down from 32.2% in fiscal 2023 and 35.0% in fiscal 2022.

But now that the federal court is challenging President Donald Trump‘s global tariffs under the International Emergency Economic Powers Act, observers expect Broadcom’s stock to rally. It opened Thursday at $245.76 per share.

Broadcom chief Hock Tan expects the company to generate tens of billions of dollars in additional annual revenue from AI chips by 2027. He also anticipates customers will build clusters of up to 1 million AI chips.

Broadcom stock surged over 72% in the last 12 months. In April, BofA Securities analyst Vivek Arya chose Broadcom as a favorite, citing demand for AI computing with an additional tailwind from the ongoing shift toward compute-hungry test-time computing and reasoning models. He dismissed concerns over Microsoft Corp MSFT canceling new data center leases and Amazon.Com Inc AMZN pausing certain lease discussions. Arya highlighted that AI demand is simply shifting between vendors rather than disappearing.

Wall Street analysts projected Broadcom’s second-quarter revenue to be $14.97 billion and EPS to be $1.56.

Price Action: AVGO stock is trading higher by 0.13% to $239.73 at the last check on Thursday.

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