$1 trillion milestone reached as AI chip boom takes center stage

Broadcom (NASDAQ:AVGO) reached a market valuation of $1 trillion after it released a forecast on Thursday that predicted annual sales of custom artificial intelligence chips would be as high as $90 billion by fiscal 2027. The chipmaker pulled off the biggest feat in response to the announcement, with shares rising nearly 20%, bringing its year-to-date gains to a whopping 95%.

Although the company’s recent quarterly performance beat analysts’ forecasts, it piqued investor interest in future artificial intelligence hardware. During an earnings call, Broadcom CEO Hock Tan highlighted the enormous total addressable market for custom artificial intelligence accelerators, estimating that it will be between $60 billion and $90 billion in three years.

Analysts on Wall Street expressed the same hopeful view. Jefferies analyst Blayne Curtis reiterated his “buy” vote and raised Broadcom’s price target to $225 from $205. Curtis observed increasing confidence in implementing xPU clusters with artificial intelligence in mind, as Broadcom had long expected.

Broadcom’s announcement had a domino effect throughout the semiconductor industry: Shares of Marvell Technology (NASDAQ:MRVL), Arm Holdings (NASDAQ:ARM), and Micron Technology (NASDAQ:MU) all rose. Looking forward, Broadcom’s growing involvement in this ecosystem has helped the company take a leading role in the next wave of hardware innovation in artificial intelligence.

This article first appeared on GuruFocus.