Monday saw a 9% increase in Broadcom shares as Citigroup restored its coverage of the company with a buy recommendation and raised its price target to $1,100. At $1,029.24, shares closed at their highest level in a whole year.
In a note to clients on Monday morning, Citigroup said that it has started covering the semiconductor and software company, noting “strength in the core business and accretion from the VMware acquisition.” In November, Broadcom acquired VMware in order to strengthen the cloud technology infrastructure that it provides to other companies.
Several businesses, including Comcast and Google, have partnered with Broadcom to develop processors and other infrastructure for specific AI applications, such as Google’s specialised tensor processing unit. Broadcom is just one of many firms hoping to cash in on the artificial intelligence boom. It can’t compete with Nvidia, though, when it comes to offering the GPUs needed to train state-of-the-art generative AI models, such as the ones that drive OpenAI’s GPT.
Citigroup’s optimism stems mostly from its view that Broadcom is well-positioned to benefit financially from the AI boom.
Source (CNBC)
