Broadcom shares rise, Goldman Sachs has ‘higher conviction’

After its market cap topped $1 trillion on Friday, rising 24% – its best day on record – Broadcoms The stock rose another 11% on Monday, boosted by increased price targets from Wall Street.

The recent rally was fueled by Broadcom’s better-than-expected earnings report late Thursday and an optimistic first-quarter outlook. Broadcom, which sells semiconductors and infrastructure software, is seeing increased demand from the boom in generative artificial intelligence and reported a 220% jump in AI revenue for the year to $12.2 billion.

Goldman Sachs Analysts who recommend buying Broadcom shares raised their 12-month target to $240 from $190, citing additional major customers for custom silicon products. They also pointed to management’s actions following its $61 billion purchase of VMware, which was completed last year.

“We are now even more confident in the company’s future revenue and earnings growth prospects,” analysts wrote in a Dec. 15 report.

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

Broadcom shares are now up 126% for the year, closing at $250 on Monday. Nvidiawhich is the main beneficiary of the AI ​​craze due to the popularity of its graphics processing units (GPUs), has surged more than 165% this year to reach a market cap of $3.2 trillion. The Nasdaq is up 34%.

Broadcom refers to its custom AI accelerators as XPUs, which are different from the GPUs that Nvidia sells. Broadcom said it doubled shipments of XPUs to “our three hyperscale customers” in the quarter. The company doesn’t name the customers, but analysts say the three are Meta, Alphabet and TikTok parent ByteDance.