Broadcom is joining Alphabet in the AI rally. Why investors are jumping in

Core Insights - Broadcom shares surged 10.3% as investors returned to tech stocks linked to artificial intelligence, with Wall Street recognizing Broadcom as a derivative play of Alphabet's AI growth [1][3] - Year-to-date, Broadcom's stock has increased by 60%, marking its best performance day since April 9, and it is the top performer in the Technology Select Sector SPDR fund [2] - Analysts have raised their outlook on Broadcom due to its strong relationship with Alphabet, particularly in the development of Google's tensor processing units (TPUs) [4][6] Company Performance - Broadcom's stock is experiencing significant momentum, attributed to its role as a major supplier of application-specific chips (ASICs) for hyperscalers [2] - Melius Research's Ben Reitzes has reiterated a buy rating on Broadcom, increasing the price target by $60 to $475, indicating a potential upside of 39.6% from the previous close [5] Strategic Partnerships - Google is a key customer for Broadcom's ASIC business, with the two companies collaborating on TPUs since 2016, which are now in their 7th generation [6] - The TPU is seen as a strong competitor to Nvidia's GPUs for AI workloads, and its development is contributing positively to both Broadcom's AI revenues and Google Cloud's growth [6][7]