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Silicon chips are a software giant Broadcom (NASDAQ: AVGO) it rose as much as 10% on Monday, before settling for a 9.5% gain as of 1:15 pm ET.
Monday’s rally came after a surge of about 25% on Friday, the day the company announced it had acquired a long-term stake in the company’s artificial intelligence (AI) chip business.
It looks like Broadcom is now looking at the next meeting on Monday, supported by a positive comment from a Wall Street analyst.
On Monday, Bank of America professional parts dealer Vivek Arya named Broadcom as one of his top semiconductor companies in 2025, despite the recent rally. Arya wrote today that he believes that the winners of artificial intelligence will continue in the first half of 2025. Then, towards the end of the second half of the year, chip components that are not compatible with the current AI, such as industrial chips, may do well. Overall, Arya sees the semiconductor business growing at a pace of 15%, above the 20% profit expected in 2024.
Broadcom’s crown jewel is its AI chip business, and it also makes chips in several markets. The fact that Arya is still listing Broadcom as a top pick, even after the stock surged 25% on Friday and shed $1 trillion in cash, adds to the high expectations.
On the back of its fourth quarter earnings that missed expectations, Broadcom CEO Hock Tan said call a meeting with experts the company expects between $60 billion and $90 billion in AI-related chip spending in 2027, up from just $12.2 billion in 2024. This seemed to confirm that the AI buildout will be longer and bigger than some skeptics might think.
Tan’s long-term guidance may have sent analysts revising their financial strategies to calculate higher earnings and earnings per share over the next three years, which is why Broadcom’s stock is rising. As long as Broadcom’s results match its new image, the move seems reasonable.
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