Analysts are optimistic about the semiconductor and software company’s capacity to ride AI momentum and deliver upbeat results later this week

Broadcom reports earnings Thursday afternoon.

Broadcom Inc.’s stock is charging toward its first record high since last year, reflecting enthusiasm ahead of the company’s earnings report later this week as well as renewed interest in the semiconductor sector.

Shares of Broadcom closed up 3.3% at $256.85 on Tuesday. The company exceed a $1.2 trillion valuation for the first time on record. The stock’s hit first new all-time high since Dec. 16, 2024.

The semiconductor and software giant is due to report second-fiscal-quarter results on Thursday, and Citi Research analyst Christopher Danely thinks the company can top consensus expectations. His own estimates, like the consensus view, sit at about $15 billion in revenue for the quarter. But he expects to see upside fueled by strong artificial-intelligence sales.

The AI business could make up about 30% of Broadcom’s revenue this fiscal year, Danely noted, but the non-AI chip business represents a similar portion of sales and is worth watching, as well.

“With its non-AI semi business … down roughly 40% from the peak, we believe the business should recover from the current levels and offset most of the gross-margin dilution from its AI business,” Danely wrote in a Tuesday note to clients.

C.J. Muse of Cantor Fitzgerald also predicted a beat-and-raise report in his weekend preview.

“All eyes will be squarely focused on commentary around near-term demand for custom silicon and the next-gen Google TPU v6 (and upcoming v7p) ramps,” Muse, wrote, referring to Alphabet Inc.’s tensor processing units.

While Nvidia Corp. dominates the AI chip market with its graphics processing units, Broadcom and Marvell Technology Inc. make application-specific integrated circuits. Their custom silicon offerings for large technology customers have been gaining traction.

“AI semiconductor growth is the largest driver for shares,” Muse wrote of Broadcom, and he sees “strong growth” coming in the second half of the year. Average selling prices could go higher then, he noted, plus Google should start ramping its v7p Ironwood TPU. Meta Platforms Inc. could have a new Broadcom product ramping soon as well, with more significant contributions from that offering expected in the October and January quarters.

Broadcom currently has three big customers for its custom silicon but has mentioned that it’s been engaging with four others. Wall Street will be looking for more details on those engagements, according to Muse.

“Beyond the identity, investors will look for any additional color on the timing, ramp and sizing of these major customers,” he commented.

Broadcom’s stock is up about 10% so far this year, while rival Marvell’s has struggled, falling 43%. With Marvell, investors seem worried about the company’s competitiveness, noted Seaport Research Partners analyst Jay Goldberg. But some fundamental trends from Marvell’s earnings report last week bode well for Broadcom, he added.

“Marvell has some well-known concerns hanging over its competitive positioning in custom ASICs, but despite these, Marvell’s business outgrew Nvidia in the quarter,” Goldberg wrote last week. “The company noted as well that customers are building inventory, which is positive in this context. As well as Nvidia is doing, the trend is broad-based with custom silicon still a major factor for hyperscalers.”

As markets have roared back in recent weeks, many semiconductor stocks have gotten hot again. The PHLX Semiconductor Index is up 12% in the past month, while Nvidia’s stock is up 24%, Advanced Micro Devices Inc.’s stock is ahead 18% and Broadcom’s stock has advanced 26%.

Analysts at Melius Research said in a note last week that Broadcom is “still one of the ‘must-own’ AI stocks,” as a leader among fabless chip providers in areas such as networking. The company’s switching business, which accounts for about 30% of its total AI revenue, is set to grow in the next few years, Melius said, as companies scale AI chip clusters.

Due to the company’s ability to offer customers AI chips for both high performance and cost-effective performance, Broadcom is “uniquely” positioned to benefit in the long term in the AI computing hardware market, Melius said.

The analysts also said Broadcom will likely see higher profits from its ownership of cloud-computing business VMware given its status as a market leader.