Broadcom Inc.’s stock has surged 38% in two trading days, catapulting its market capitalization to nearly $1.2 trillion. The chipmaker’s AI business is driving the rally, with analysts predicting a massive addressable market for AI components by 2027. However, investors are warning that Broadcom still needs to deliver sustained growth and justify its record-high valuation.
Analysts point to Nvidia Corp., which has also experienced significant growth in the AI space, as a benchmark. But some caution that not every “Nvidia moment” leads to sustainable gains. Arm Holdings Plc’s recent bullish forecast sparked a 93% surge, but shares have since declined by over 20%.
Broadcom’s CEO Ken Mahoney says the demand for AI computing is so big that there’s room for other winners aside from Nvidia. The company has been having a strong year, with solid growth in its AI business, and analysts are scrambling to keep up with price targets and estimates.
The stock’s valuation has raised concerns about overvaluation, with some analysts warning that Broadcom needs to show good execution and growth to justify the record-high multiple of 38 times. Still, Nvidia has set a bullish precedent for investors looking for the next big AI winner.
As Broadcom continues to ride its AI wave, it remains to be seen whether the company can sustain its momentum or if the rally stalls.
Source: https://finance.yahoo.com/news/broadcom-nvidia-moment-arrived-now-103618972.html