Broadcom is positioned as a critical supply-chain beneficiary of Nvidia's continued GPU momentum and datacenter demand surge.

Broadcom's shares have soared 38% through Monday's close—the two trading days since it reported results—pushing the company's market capitalization to nearly $1.2 trillion. At the heart of the rally is Broadcom's prediction that the addressable market for AI components it designs for data center operators will be as big as $90 billion by fiscal 2027. "This is kind of like the Nvidia moment of maybe a year-and-a-half ago where they blew the number out and everybody had to catch up and chase it," said Ken Mahoney, chief executive officer at Mahoney Asset Management, which owns the stock. Broadcom is showing investors that the demands from AI computing are so big that there's plenty of room for other winners aside from Nvidia, Mahoney said.

Broadcom was having a strong year even before last week's results, with solid growth in its AI business underpinning its performance as one of the top stocks in the Philadelphia Semiconductor Index. This quarter's results have turned the focus squarely back to AI, with Broadcom shares now up more than 110% year-to-date, set for the best annual performance since their 2009 listing. Analysts have been scrambling to keep up, with multiple Wall Street firms hiking price targets and estimates following the earnings. Still, even a 19% jump in the average analyst target since the results has failed to keep pace with the shares, according to data compiled by Bloomberg.

The trajectory has inevitably spurred comparisons with Nvidia, the stock market's original AI winner. Nvidia followed its blowout earnings report in May 2023 with a series of estimate-beating results and quarterly forecasts, and is up about 159% this year. "I see a lot of parallels between Broadcom and Nvidia," said Joe Tigay, portfolio manager of the Rational Equity Armor Fund, who sees reason to believe Broadcom's stock can show sustainable gains in the same way as Nvidia. "Obviously Broadcom still needs to deliver to justify a 38 times multiple, but it has shown good growth and execution this year." That multiple—the price investors have to pay for shares relative to earnings projected over the next 12 months—is pushing deeper into record territory, with estimates for Broadcom's net earnings per share for fiscal 2025 having risen 12% in the past week.

Not every "Nvidia moment" has turned into a sustained gain, however. Arm Holdings gave a bullish forecast in February, and said it was "only at the beginning" of the AI boom, which sparked a 93% surge in the stock over the next three sessions. But the shares haven't progressed much since then and are now down more than 20% from a July peak. "It is too soon to say whether we're going to see a series of blowout reports like we've gotten from Nvidia," said Alec Young, chief investment strategist at Mapsignals. "Broadcom has done a really good job, but these things don't always end well."