Broadcom's stock surged by 6% on Friday following a robust revenue forecast, restoring confidence in AI chip demand after a recent market dip triggered by Marvell Technology's less favorable outlook. As the leading supplier of customized AI chips to major tech companies, Broadcom's positive forecast is anticipated to reinvigorate a sluggish AI stock market.
Morgan Stanley analysts noted, "Given the prevailing concerns about AI, Broadcom's results offer some reassurance." CEO Hock Tan announced revenue of $4.4 billion in the second quarter, showcasing a shift by prominent cloud providers towards lower-cost AI infrastructure.
Nvidia, a prominent AI chip producer, saw a 2% increase in shares, while Micron Technology experienced a more than 3% uptick. Conversely, Marvell faced a decline of over 3% on Friday, plummeting by 19.8% the day before due to an underwhelming revenue forecast.
Despite an expected $50 billion boost in market value, which falls short of its previous $1 trillion valuation, Broadcom's optimistic outlook is seen as a beacon in the midst of AI market uncertainty, according to Bernstein analysts.
Broadcom shares have dropped over 20% this year, after a 2024 doubling. The broader Philadelphia Semiconductor index is down about 10% in 2025, impacted by increased tariffs under the Trump administration. Broadcom under Tan has diversified into various tech sectors, such as the recent acquisition of cloud-computing firm VMware.
Dan Morgan, senior portfolio manager at Synovus Trust, highlighted Broadcom's unique position in having a substantial market share in enterprise software, providing stability during industry downturns.
Broadcom reported a significant 47% growth in software revenue in the first quarter, now accounting for over 40% of total sales. The company's 12-month forward price-to-earnings ratio stands at 26.58, compared to Nvidia's 23.46 and Marvell's 24.50, according to LSEG data.