By Kanchana Chakravarty and Arsheeya Bajwa
(Reuters) -Broadcom’s shares rose 6% on Friday as the semiconductor maker’s strong revenue forecast helped restore some confidence in AI chip demand after a bruising sector-wide selloff following rival Marvell Technology’s bleak outlook.
The rosy forecast from Broadcom – the biggest supplier of custom AI chips to Big Tech – could help refuel a sputtering AI stock rally that has been hit by worries over hefty spending on AI infrastructure sparked by low-cost breakthroughs from Chinese startup DeepSeek.
“Given the anxiety about AI conditions in general, these (Broadcom) results should come as a relief,” according to Morgan Stanley analysts.
Broadcom CEO Hock Tan said on Thursday the company expects AI chip revenue of $4.4 billion in the second quarter, underscoring the push from large cloud providers to reduce dependence on the costly processors designed by Nvidia.
AI chip leader Nvidia rose 2% and memory chipmaker Micron Technology’s shares gained more than 3% on Friday.
Smaller rival Marvell’s shares, however, fell more than 3% on Friday, after they closed down 19.8% on Thursday, marking their worst day in more than two decades due to a disappointing in-line revenue forecast.
Broadcom is set to add more than $50 billion to its market value, if gains hold, but would still be below the $1 trillion valuation threshold it had first crossed in December in what was dubbed as its “Nvidia moment”.
“Perhaps the AI trade isn’t as dead as feared … but amid AI nervousness, (Broadcom) management’s view of the future is becoming even more positive,” Bernstein analysts said.
Broadcom’s shares have fallen more than 20% so far this year, after doubling in 2024. The broader Philadelphia Semiconductor index is down about 10% so far in 2025, after gaining nearly 20% last year, as higher tariffs under U.S. President Donald Trump weigh on the sector.
Under Tan, Broadcom has also expanded its strategy of building a diverse portfolio of tech companies such as its $69-billion buyout of cloud-computing firm VMware.
“Broadcom is unique as a portion of their business comes from enterprise software,” said Dan Morgan, senior portfolio manager at Synovus Trust, which holds shares of the chipmaker.
“This is a blessing when the chip sector goes through a downturn.”
Broadcom’s software revenue grew 47% in the first quarter to $6.70 billion, representing more than 40% of total sales.
The company has a 12-month forward price-to-earnings ratio of 26.58, compared with 23.46 for Nvidia and 24.50 for Marvell, according to data compiled by LSEG.
(Reporting by Kanchana Chakravarty, Siddarth S and Arsheeya Bajwa in Bengaluru; Editing by Shounak Dasgupta)
