A Wall Street analyst on Wednesday named Broadcom stock as his "top pick" among semiconductor stocks. Even with its recent rise, Broadcom still has room to run, he said.
Mizuho Securities analyst Vijay Rakesh reiterated his outperform rating on Broadcom stock with a price target of 310.
On the stock market today, Broadcom stock advanced 2% to close at 269.90.
The Palo Alto, Calif.-based company is benefiting from AI-driven tailwinds for its networking and custom ASIC chip businesses, Rakesh said in a client note.
"We see the biggest catalyst for (Broadcom) as further AI ASIC ramps," Rakesh said.
The company is making application-specific integrated circuits (ASICs) for artificial intelligence applications for Alphabet unit Google, Facebook parent Meta Platforms and TikTok parent ByteDance.
Also, Broadcom has been in talks to develop AI chips for Apple, OpenAI and two other potential customers, Rakesh said.
While Broadcom stock is his top pick among chip stocks, Rakesh named Nvidia and Micron Technology as his second and third picks, respectively. Those two companies also are profiting from the AI data center buildout.
On June 3, Broadcom stock broke out of a 24-week consolidation pattern at a buy point of 251.88, according to IBD MarketSurge charts. On Monday, it hit an all-time high of 277.71.
Broadcom stock is on two IBD lists: Leaderboard and Tech Leaders.
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