Fresh research covering next-generation semiconductors proved to be a rising tide for the sector on Friday. Among the stocks benefiting was custom chip specialist Broadcom (AVGO +1.21%); it closed that trading session 1.2% higher, easily topping the 0.4% increase of the bellwether S&P 500 index.
The bulls weigh in
That morning, BMO Capital Markets analyst Harsh Kumar launched coverage of selected semiconductor and quantum computing stocks. In his estimation, Broadcom is No. 2 in the former sector with an outperform (read: buy) recommendation and $455 per share price target. It's behind only ubiquitous artificial intelligence (AI) chipmaker Nvidia.
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According to reports, Kumar believes the AI revolution is only getting started. Despite recent investor concerns about the vast amounts of capital being spent on AI build-outs, he feels this trend is here to stay for years.
Bolstering that argument was a similar analysis of AI companies by Nikolaos Panigirtzoglou, strategist at JPMorgan Chase unit J.P. Morgan. According to reports, he wrote that AI-related revenue from companies harnessing the technology is supporting capital expenditures for the build-outs.
NASDAQ: NVDA
Key Data Points
The trend is quite a friend
Those takes are realistic and well-grounded, for sure; however, I don't think they'll entirely obliterate the understandable concerns about the significant ramp-up in AI spending. Still, if this trend is going to persist to any degree, I have little doubt Broadcom (and Nvidia, while I'm at it) will continue to reap the benefits. I'd be bullish on Broadcom's near- and long-term future too.
