On Tuesday (18th local time), Nvidia topped the global market value list and completed a milestone of $3 trillion and a leap from third to first place within three weeks. After this artificial intelligence giant released its financial report, the industry was full of positive news, and the chip industry also held the top position in the S&P index for the first time. There were seven chip companies with a market value exceeding $200 billion.
Recently, two companies are standing out, with Broadcom becoming the second chip stock to enter the top ten in the US stock market. Micron Technology, which is about to release its results, is also highly expected by the market.
AI revenue surge helps Broadcom soar
On Tuesday, Broadcom briefly surpassed Lilly Pharmaceuticals to become the ninth largest company in the world by market value.
According to Dow Jones market data, the market value of this chip company has also benefited from the AI boom. A year ago, Broadcom was still the 16th largest company in the S&P 500 index. Last Thursday (13th), its market value exceeded $700 billion for the first time, and the next day, it crossed the threshold of $800 billion.
The latest financial report is undoubtedly a booster. The company's revenue for the second quarter of 2024 was $12.49 billion, an increase of 43% compared to the same period last year. "The performance in the second quarter was once again driven by the demand for artificial intelligence and VMware," said Chen Fuyang, CEO of Broadcom. He added, "Our AI product revenue reached a record breaking $3.1 billion this quarter.".
The stock price of Botong subsequently rose by more than 30%. Melius Research analyst Ben Reitzes wrote in a report to clients, "The growth in artificial intelligence and software revenue at Broadcom is good, and performance is expected to further release as key clients improve their AI (capital expenditure) forecasts."
Although Broadcom has raised its artificial intelligence revenue forecast for this fiscal year by over $1 billion, Reze believes that the new target still seems very conservative. "There may be a lot of room for improvement in the guidelines, which remain the main number of investors' concerns. We are well aware that key clients such as Meta and Google are shifting more spending towards accelerators and Ethernet based clusters."
Evercore ISI analyst Mark Lipacis also tends to suggest that the guidance does not reflect expectations enough. "Broadcom is adding two new custom artificial intelligence clients, which seems to give it excellent mid-term visibility into AI driven revenue on the processor side. At the same time, its Ethernet solution seems to be gaining traction in AI data centers. At the same time, the company is doing better than expected in integrating VMware into the business and is seeking better revenue and cost synergies than previously announced.". Lipahis has raised the target price of Broadcom's stock from $1620 to $2010, rated as outperforming the market.
Jeffrey analyst Blayne Curtis believes that as the adaptive adjustment of business direction is gradually completed, Broadcom should benefit from the sustained growth of artificial intelligence and the cyclical recovery of other industries. In addition, the company will conduct a 1:10 stock split in July, which is expected to be welcomed by the market. He rated the stock as buy with a new target of $2050, higher than the previous $1550.
Micron Technology's financial report is optimistic
Micron Technology is another hot topic in the recent market, with its stock price rising in seven out of the past eight trading days, with a rise of about 18% during this period. So far this year, it has accumulated an increase of over 80%.
According to the arrangement announced by the exchange, Micron will release its financial report next Wednesday (26th), and investors are increasingly optimistic about next week's financial report.
Michael Klein, an analyst at Mizuho Technology, wrote in a report that Micron's performance next week feels more like a positive catalyst. This is because he expects executives to spare no effort in discussing improved demand, tight industry supply, further price increases, and the leadership of high bandwidth memory (HBM DRAM), "investors have a fear of missing out on FOMO."
According to insiders cited by the media, Micron Technology is accelerating the construction of advanced HBM testing production lines in the United States and considering producing HBM for the first time in Malaysia to seize more demand brought about by the artificial intelligence boom.
Wedbush analyst Matt Bryson is also optimistic about the extent to which Micron will ultimately benefit from pricing. He predicts that the average selling price, revenue, profit margin, and earnings per share of Micron will "significantly increase", and will raise the target price from $130 to $170. "We expect only positive news about Micron's financial situation in the near future until we see changes in industry investment plans (given the depth of the recent economic downturn and industry participants' focus on profitability, we believe the possibility of short-term changes is limited)."
Stifel analyst Brian Chin is optimistic about Micron's HBM3E product. "The demand for HBM from artificial intelligence remains the main catalyst, and by further consolidating pricing power, Micron can optimize its portfolio and focus on improving HBM3E." He predicts that Micron will obtain authorization for its 12 Hi HBM3E on the Nvidia B200 platform by the end of the year, and the current price is a reasonable pricing for the growth prospects of the artificial intelligence industry.