Broadcom Inc. (NASDAQ:AVGO) shares rose Thursday after Nvidia Corp. (NASDAQ:NVDA) delivered strong quarterly results that reinforced investor confidence in the AI-driven demand cycle.
Nvidia late Wednesday delivered earnings that far exceeded expectations, underscoring relentless demand for AI chips.
On Wednesday, Nvidia CEO Jensen Huang confidently rebuffed fears of a slowdown in AI chip investment, stating that a multi-trillion-dollar market opportunity will unfold over the next five years.
His comments, reported by Reuters, come amid intense investor scrutiny over the sustainability of the recent spending boom on artificial intelligence.
For its fiscal second quarter, Nvidia reported revenue of $46.74 billion, a 56% year-over-year increase, surpassing Wall Street's $46.02 billion estimate.
Adjusted earnings per share came in at $1.05 versus the expected $1.01, while adjusted gross margin reached 72.7%, highlighting the company's pricing strength.
Data Center revenue surged to $41.1 billion, also up 56% sequentially, driven by demand for its Blackwell AI platform.
Although Nvidia booked no sales of its H20 chip to China during the quarter, it released $180 million in H20 inventory to a customer outside the region.
The company also authorized a $60 billion stock buyback. For third-quarter, Nvidia expects revenue between $52.92 billion-$55.08 billion (versus $52.96 billion consensus) and adjusted gross margins around 73.5% ±50bps implying continued momentum in the industry. The company expects to end 2025 with gross margins in the mid-70% range.
Broadcom, which supplies custom chips and networking solutions critical to the data infrastructure powering AI, has gained more than 30% year-to-date. Investor optimism has been bolstered by rising AI outlays from Microsoft (NASDAQ:MSFT), Meta Platforms (NASDAQ:META), Apple (NASDAQ:AAPL), and other major technology firms. Nvidia’s strong results have continued to fuel that momentum.
Broadcom has also expanded its collaboration with Nvidia, integrating Blackwell GPUs, NICs, and DPUs into VMware Cloud Foundation in an effort to deliver faster networking and enhanced AI training capabilities for enterprise private clouds.
Wall Street remains constructive on Broadcom's outlook. According to 29 analysts, the stock carries a consensus price forecast of $344.32. Recent ratings from UBS, Piper Sandler, and Goldman Sachs averaged $333.33, suggesting a potential upside of about 10%.
Price Action: AVGO stock is trading higher by 2.72% to $308.43 at last check Thursday.
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