Broadcom Inc. closed Friday at an all-time high of $446.77, gaining 4.73% on the day and 7.9% for the holiday-shortened week, as investor enthusiasm around artificial intelligence chips propelled the stock to new heights. The chipmaker's shares touched an intraday record of $448.90 before settling, underscoring the market's optimism ahead of its fiscal second-quarter earnings report due June 3.
The upcoming earnings release is widely viewed as a pivotal moment for the AI semiconductor trade, with Broadcom's outlook expected to provide critical signals on demand for custom AI chips. The company previously guided for second-quarter revenue of approximately $22.0 billion, a 47% year-over-year increase, with AI chip revenue projected at $10.7 billion. CEO Hock Tan has emphasized accelerating AI revenue growth, positioning Broadcom as a key player in the custom chip arena, alongside networking and software.
Analysts have been raising price targets in anticipation of strong results. Susquehanna analyst Christopher Rolland lifted his target to $490 from $450, maintaining a Positive rating, citing solid momentum around custom XPU processors used for AI workloads. Oppenheimer's Rick Schafer also expressed bullishness, expecting upside in both fiscal Q2 results and the July-quarter outlook, driven by AI. However, he cautioned that expectations are high given the stock's recent rally.
Broadcom's role in AI extends beyond its own chip sales. Reports indicate the company is backing a $36 billion debt financing package arranged by Apollo Global Management and Blackstone for Anthropic's AI hardware buildout. The funds would be used to purchase Google tensor processing units, with Broadcom backstopping the largest portions of the deal. This highlights Broadcom's deepening involvement in the AI infrastructure ecosystem.
The broader custom-chip market is gaining momentum. Marvell Technology recently projected its custom-chip revenue could exceed $10 billion by fiscal 2029, as cloud providers seek tailored processors to reduce reliance on Nvidia. Marvell and Broadcom are both collaborating with hyperscalers on custom designs, pointing to a diversifying market beyond just one dominant player.
Beyond AI, Broadcom continues to advance its non-AI business. Last week, the company launched a fixed wireless access platform using 5G and Wi-Fi 8 in partnership with Samsung Electronics, with trials underway by carriers globally. Wi-Fi 8 remains under development as the next-generation wireless standard for home and enterprise use.
The broader market provided a tailwind. The S&P 500 rose 0.2% Friday, marking its ninth consecutive weekly gain, while the Nasdaq added 0.2% and ended the week 2.4% higher. Semiconductor stocks benefited from month-end positioning, supporting Broadcom's rally.
However, risks loom. Investors are bracing for the May jobs report on June 5, which could influence Treasury yields and the Federal Reserve's policy path. A strong hiring number could push yields higher, potentially weighing on high-valuation stocks like Broadcom. Conversely, a weaker report might ease tightening fears. Even if Broadcom's quarterly results meet expectations, the stock could face pressure if management's July-quarter guidance falls short on AI chip and networking growth, or if revenue tied to Anthropic and Google custom chips disappoints. With limited room for error, all eyes will be on the company's forward outlook.
