The darling of Wall Street has changed! Broadcom and NVIDIA are increasingly diverging, with Broadcom rising over 11% and NVIDIA falling
Despite the lack of support from NVIDIA, the Nasdaq Composite Index still reached a record high on Monday. On the same day, some other semiconductor stocks also performed well. Micron Tech rose over 5% ahead of its upcoming quarterly earnings report, and at one point surged over 8%. Marvell Technology increased by 3.3%, while Lam Research rose over 2%
After surpassing a market value of $1 trillion and achieving a 24% single-day maximum increase last Friday, Broadcom surged over 11% on Monday, closing at $250, with an intraday record high of $251.88, driven by Wall Street raising its target price.
In contrast, Nvidia's stock price fell on Monday, dropping nearly 3% intraday and closing down nearly 1.7% at $132. Since December, Nvidia's stock price has cumulatively declined by about 4.5%, falling over 11% from last month's closing high of $148.88, officially entering a correction zone. It is generally believed that a stock price decline of 10% or more from its historical closing high constitutes a correction.
Looking at the performance this year, Nvidia's stock price has cumulatively increased by about 165%, while Broadcom's stock price has risen by about 120% this year, both significantly outperforming the broader U.S. stock market, with the Nasdaq index up about 34% this year.
The recent surge in Broadcom's stock price is attributed to the company's better-than-expected earnings report and optimistic first-quarter outlook released on Thursday evening. Benefiting from the generative artificial intelligence (AI) boom, Broadcom's AI-related revenue soared 220% year-on-year to $12.2 billion.
Broadcom refers to its custom AI accelerator as XPU, which differs from the GPUs sold by Nvidia. Broadcom stated that the XPU shipments delivered to three hyperscale customers doubled this quarter. Although Broadcom has not disclosed the customer names, analysts believe these three companies are Meta, Alphabet (Google's parent company), and ByteDance (TikTok's parent company).
Wall Street Journal analysis points out that there is a "paradigm shift" in the AI industry from Nvidia to Broadcom. As AI large models transition from the pre-training phase to the logical reasoning phase, dedicated chips represented by ASICs may gradually replace general-purpose chips represented by GPUs, becoming the "new favorites" of major AI companies. Analysts suggest that if Broadcom's CEO's predictions about the ASIC market are accurate, the company's ASIC-related AI business is expected to achieve annual growth of 100% over the next three years.
Here are the latest views from Wall Street analysts:
- Goldman Sachs recommends buying Broadcom stock and raised its 12-month target price from $190 to $240, citing an increase in new major customers for custom chip products and the management's excellent execution after last year's $61 billion acquisition of VMware. "We are more confident in the company's future revenue and profit growth prospects."
- Barclays raised Broadcom's target price from $200 to $205.
- Truist raised Broadcom's target price from $245 to $260. Building infrastructure requires Nvidia and its chips, but the market is also expressing the view that other companies can benefit from this as well. There have been multiple rotations within the Seven Sisters this year.
- Bokeh Capital Partners: Broadcom's statements last week may prompt trend investors to start paying attention to the company, seeking faster-growing targets. Trend investing has driven the stock's performance, and I believe it won't lose momentum in the short term, but the nature of trend investing is that it always seeks better-performing targetsMedia analysis suggests that NVIDIA's recent poor performance may indicate that Wall Street is taking profits after another stellar year. There are some concerns for NVIDIA. Despite the overall market hitting new highs, NVIDIA has lagged behind. If this trend continues, it could be a warning sign. Industry insiders point out that the price range between $125 and $130 is a key testing zone for NVIDIA's stock and the overall market.
Despite the lack of support from NVIDIA, the Nasdaq Composite Index still reached a historic high on Monday.
On Monday, some other semiconductor stocks also performed well. Micron Technology rose over 5% ahead of its upcoming quarterly earnings report, with an intraday increase of over 8%. Marvell Technology rose 3.3%, and Lam Research increased by over 2%