Veteran analyst issues big Broadcom call, shakes up AI stock race | Official Website of Louis Velazquez, entrepreneur, finance guy and tech innovator

It’s no secret that Nvidia’s (NVDA) shiny GPUs have stolen the spotlight as AI’s headline act.

However, behind the hype, AI-infrastructure players like Broadcom (AVGO) offer the secret sauce, keeping it all running.

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That behind-the-scenes position may seem boring on paper, but it’s mission-critical in running AI at scale.

Every flashy ChatGPT, Gemini, Grok, or Claude needs invisible, bulletproof infrastructure to work at scale.

That’s where Broadcom comes in, which makes it quietly indispensable.

You could potentially swap GPUs, but good luck swapping out the entire integrated stack that Broadcom pieces together.

Moreover, analysts have taken note in a big way, especially as Broadcom stock continues to deliver earnings stunners quarter after quarter.

Broadcom stock’s quiet AI edge just got louder on Wall Street

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The quiet AI backbone Wall Street can’t ignore

Broadcom isn’t dishing out the flashy GPUs that make headlines.

Instead, it’s involved in the boring plumbing that keeps the AI boom flowing.

Everything from custom silicon to swift optical interconnects, powerful networking, and the VMware software glue that ties everything together.

While Nvidia soaks up the bulk of the spotlight, Broadcom quietly powers AI’s backbone.

Hyperscalers like Google and Meta rely on Broadcom’s custom ASICs instead of off-the-shelf GPUs.

These chips specifically target massive inference workloads, cutting power use and reducing costs.

Moreover, it’s not just hardware that Broadcom targets.

Broadcom’s VMware integration turns its platform into a plug-and-play AI stack.

Virtual GPU sharing, smart resource management, and deep monitoring are all built in, with that combo killing the headaches that pure GPU stacks can’t handle alone.

Consequently, Broadcom’s infrastructure software sales skyrocketed to $21.5 billion last year, triple the year before.

Also, its 3.5D packaging and optical tech pack racks are tighter than those of any traditional GPU farm, significantly boosting performance and efficiency.

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Layer that up with Broadcom’s ‘buy-integrate-optimize-rebuy’ playbook, which locks in multi-year deals with cloud giants, and you have its free cash flow surging.

HSBC ramps Broadcom stock target, citing AI chip strength

HSBC’s Frank Lee just boosted his price target on Broadcom stock from $240 to $400, a 66.7% hike, and upgraded it to a Buy.

Lee cites the incredible potential of Broadcom’s custom ASIC chips, saying sales should “significantly beat market expectations” due to healthy pricing power and a clearer pipeline from major hyperscalers.

It’s important to note that HSBC wasn’t always this bullish.

Earlier this year, it worried about Apple potentially eating into Broadcom’s wireless share.

In a stunning turnaround, the fresh target nearly doubles the old one, flipping the script and highlighting the depth of Broadcom’s VMware integration and its edge in AI chip infrastructure.

Similarly, Broadcom stock is now firmly on UBS’s radar as one of the top 10 AI stocks investors are watching.

UBS kept a Buy rating on both Nvidia and Broadcom, calling them big winners as AI demand continues to boom.

Broadcom stock was on a roll last week, surging more than 6% as it opened Monday, June 23, at $253.77 and closed Friday at $269.35.

It comes into this week trading near its 52-week peak of $271.85, up almost 8% over the past seven days. Also, its 30-day gain of 12.8% and year-to-date jump of 16.8% highlight steady momentum.

A lot of that is down to another stunning second-quarter earnings print.

On June 6, Broadcom reported Q2 revenues of $15.0 billion, beating the consensus by 0.4%, while representing a 20% year-over-year jump.

Adjusted EPS climbed to 44% to $1.58, nudging past the $1.57 estimate.

The AI segment shone the brightest with AI-driven chip and networking revenue rising an incredible 46% to $4.4 billion.

Those numbers were mostly driven by hyperscaler orders and marked its 10th straight quarter of double-digit AI growth.

Infrastructure software sales were up 25% to $6.6 billion, on the back of healthy VMware subscription conversions.

The company management guides for Q3 revenue of $15.8 billion and models a 60% rise in AI semiconductor sales.

That confidence shows that AI tailwinds will continue driving top-and bottom-line expansion for the foreseeable future.