Top Line
This isn't just an Nvidia issue: Another Silicon Valley semiconductor giant is enjoying a surge in its stock price as investors never tire of AI-heavy companies, knocking on the door of the exclusive club of trillion-dollar companies.
Broadcom shares surged on Thursday.
Key Facts
Broadcom shares jumped 12% to a record high on Thursday after the company reported better-than-expected quarterly profit and revenue, helped by a 280% year-over-year increase in its AI business.
Broadcom, which designs semiconductor chips for products such as iPhones and makes data center storage and other tech products, saw its market capitalization rise by $85 billion on Thursday.
This has raised the company's valuation to approximately $780 billion, making it the 11th largest in the world.
Broadcom's market capitalization has risen by $126 billion this week alone, nearly surpassing the total valuation of Silicon Valley veteran Intel ($130 billion).
Broadcom shares are up 50% since the start of the year and up 200% dating back to the end of 2022, when the AI rally began.
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Points to note
Broadcom “has the potential to join the trillionaire club,” Bank of America analysts led by Vivek Arya predicted in a client note Thursday, calling it a “top two” AI stock, perhaps joining the more obvious Nvidia. Broadcom's shares would need to rise to around $2,150 from Thursday's $1,680 to reach a $1 trillion valuation. Bank of America is one of the few banks that believes in Broadcom's 13-figure potential, setting a $2,000 price target on the stock, implying a market cap of $900 billion.
Main Background
Broadcom is now worth more than Tesla, JPMorgan Chase, ExxonMobil and Walmart. There are only six other U.S. public companies with market capitalizations over $1 trillion: Apple, Microsoft, Nvidia, Alphabet, Amazon and Meta. These companies are likely more familiar to the average American. Broadcom announced Wednesday that it would implement a 10-for-1 stock split on July 15, one month after rival Nvidia split its stock. Due to their geography, product proximity and similar focus on large customers, Broadcom and Nvidia are often portrayed as rivals. But Broadcom's signature custom silicon chips and Nvidia's graphics processing units are like comparing apples and oranges; they're both the same. [can] “Broadcom completed its $69 billion acquisition of cloud-computing company VMWare last fall, making it the second-largest acquisition of the 2020s,” Rosenblatt analyst Hans Mosesmann said.
