What Happened:
Shares of fabless chip and software maker Broadcom (NASDAQ:AVGO) jumped 8.52% in the morning session after the company's stock enjoyed bullish sentiments from Wall Street analysts who expect huge potential in the artificial intelligence market. KeyBanc Capital Markets' John Vinh expects Broadcom to benefit in the near-term from its generative AI capabilities--specifically, its TPU product. JPMorgan's Harlan Sur echoed this and praised Broadcom's custom-chip business, which he said is "gaining traction with Google for its cutting-edge AI processor chip, TPU."
What is the market telling us:
Broadcom's shares are somewhat volatile and over the last year have had 9 moves greater than 5%. In context of that, today's move is indicating the market considers this news meaningful but not something that would fundamentally change its perception of the business. The previous big move was seven days ago, when the company gained 5.41% on the news that Apple announced a multi-billion dollar deal with the company to secure the supply of critical 5G and wireless components for its devices. The deal involves Broadcom providing Apple with advanced radio frequency (RF) solutions, including FBAR filters that enable high-performance cellular connectivity.
Broadcom is up 55.4% since the beginning of the year. Investors who bought $1,000 worth of Broadcom's shares 5 years ago would now be looking at an investment worth $3,450.
Is now the time to buy Broadcom? Access our full analysis of the earnings results here, it's free.