Broadcom is Monday's IBD Stock Of The Day as the chipmaker and infrastructure software provider enjoys a tailwind from the artificial intelligence trend. Broadcom stock also is approaching a buy point.
The Palo Alto, Calif.-based company provides an alternative to Nvidia's market-leading AI chips by offering custom application-specific integrated circuits, or ASICs.
Broadcom makes data-center AI chips for Alphabet's Google and Facebook parent Meta Platforms. In March, Broadcom announced that it added a new customer for its AI chip business. It didn't identify the customer, but several prominent Wall Street analysts speculated that the company is TikTok parent ByteDance.
On Sunday, Jefferies analyst Blayne Curtis assumed coverage of Broadcom stock with a buy rating and price target of 1,550.
On the stock market today, Broadcom stock rose a fraction to close at 1,337.51.
Broadcom Stock On Two IBD Lists
The uptrend in the semiconductor cycle is still early and is being helped by cloud-computing services spending heavily on AI infrastructure, Curtis said in a client note.
"Cloud capex budgets are rising and the runway for growth is expanding as they do," Curtis said. "As long as cloud providers continue to foot the bill, the AI group should continue working."
AI could reach 25% of semiconductor industry revenue by 2027, vs. 5% in 2022, he said.
The next catalyst for Broadcom stock is likely to be the company's fiscal second-quarter report on June 12.
According to IBD MarketSurge charts, Broadcom stock has been consolidating for the past 10 weeks at a buy point of 1,438.17. However, aggressive investors could use its rise above a downward trendline near 1,350 as an early entry, based on IBD analysis.
Broadcom stock is on two IBD stock lists: SwingTrader and Tech Leaders.
Follow Patrick Seitz on X, formerly Twitter, at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
