Key Points
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Broadcom’s specialized AI chips have seen strong demand as the focus shifts to efficiency.
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Alphabet unveiled a massive capital raise to support AI infrastructure.
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Nvidia touted Broadcom rival Marvell as the next trillion-dollar company. What’s good for the goose…
- 10 stocks we like better than Broadcom ›
It isn’t like that company needed any help. Broadcom (NASDAQ:AVGO) has been experiencing strong demand for its artificial intelligence (AI) solutions for much of the past three years. Since the advent of AI in early 2023, the stock had surged 723% through market close on Monday.
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Yet Tuesday saw the stock climb 5% to a record high, as a confluence of events in the AI space conspired to send the semiconductor and data center specialist to new heights.
Based on today’s catalysts, there could be more to come for Broadcom.
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Alphabet makes a big, bold bet
After the market close on Monday, Alphabet (NASDAQ:GOOGL) (NASDAQ:GOOG) unveiled plans that made investors sit up and take notice. In a press release, the Google parent announced a proposed $80 billion equity capital raise “to expand AI infrastructure and compute.”
To that end, Alphabet reached an agreement with Berkshire Hathaway for a $10 billion private stock placement, adding to a stake the company has been building since late last year. In addition, several large investment banks have agreed to buy $30 billion of Alphabet stock to sell to clients, while the remaining $40 billion will come from sales of its Class A and Class C shares, which will be sold on the open market beginning in the third quarter.
So what does this have to do with Broadcom? The company is the leading provider of Application-Specific Integrated Circuits (ASICs), a family of specialized chips that can be customized to be more efficient and boost performance for specific AI tasks. Google’s Tensor Processing Units (TPUs) are one example of these specialty chips. Broadcom helps to design and manufacture the high-performance cores that power Google’s TPUs.
The magnitude of Alphabet’s spending to build out its AI infrastructure suggests Broadcom will profit from its ongoing partnership with Google.
Nvidia CEO Jensen Huang makes a big, bold prediction
During a presentation at Nvidia‘s GPU Technology Conference (GTC) Taipei on Monday, CEO Jensen Huang made a statement that got tongues on Wall Street wagging. The enigmatic chief executive appeared on stage with Marvell Technology (NASDAQ:MRVL) CEO Matt Murphy, saying the company is “going to be the next trillion-dollar company.”
What made that statement all the more eye-opening is the fact that Marvell started the week with a market cap of just $179 billion, suggesting a more than fivefold increase. Furthermore, there are four dozen companies with higher market caps, any one of which could outpace Marvell and get to the $1 trillion club sooner.
Marvell stock has experienced a meteoric rise and had already gained 141% in 2026 by the close of trading on Friday. Huang’s pronouncement lit a fire under the stock, which is up 61% over the past two days.
Again, you ask, what does this have to do with Broadcom? Marvell is a direct rival of Broadcom’s in the networking and data center connectivity space, and the two compete head-to-head in designing custom data center processors. This suggests that if demand for AI infrastructure is sufficient to lift Marvell’s stock price to that degree, it also bodes well for Broadcom and its shareholders.
We’ll know soon enough
The market has set a high bar for Broadcom ahead of the company’s Q2 earnings report, which is scheduled for after the market close on Wednesday. Broadcom is expected to continue its feverish growth.
In its fiscal 2026 first quarter (ended Feb. 1), the company generated revenue that grew 29% year over year to $19.3 billion, driving its adjusted earnings per share (EPS) up 28% to $2.05. The headline was the company’s AI solutions, which grew 106%. Management’s outlook suggests Broadcom’s blistering run is poised to continue, as the company is guiding for revenue growth of 47% to of $22 billion, and adjusted EBITDA to rise 50% to roughly $14.96 billion.
Even after hitting a record high today, Broadcom’s price/earnings-to-growth (PEG) ratio — which takes into account the company’s rapid growth — returns a multiple of 0.59, when any number less than 1 suggests an undervalued stock.
That’s why I’m convinced that Broadcom stock is still a buy, despite its relentless run.
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Danny Vena, CPA has positions in Alphabet, Broadcom, and Nvidia. The Motley Fool has positions in and recommends Alphabet, Berkshire Hathaway, Broadcom, Marvell Technology, and Nvidia. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
