Why Broadcom Stock Topped the Market on Friday
Key Points
Well-known tech stocks were buoyed by improved sentiment in the sector as the trading week came to a close.
This one is prominent thanks to its specialized AI products.
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Investor sentiment on tech stocks drove many of those titles higher on Friday. This included Broadcom (NASDAQ: AVGO), whose profile has risen thanks to its cutting-edge artificial intelligence (AI) chips. The company was swept up in the bullish trend, which was bolstered by an analyst's price target raise on its stock.
A 2% move made a difference
The raiser was Truist Securities's William Stein, who made an upward adjustment to his Broadcom target to $510 per share; previously, his price tag was $500. In making the change, he maintained his buy recommendation on the company.
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Stein acknowledged the concern many investors have expressed about the significant resource and capital needs of AI, according to reports. Yet he feels certain AI-associated stocks remain inexpensive relative to their powerful growth potential, and Broadcom is one of those bargains.
The pundit wrote that, despite the challenges of building out the technology, AI investment will continue to mount in the proximate future. As a renowned AI chipmaker, Broadcom is sure to benefit from this.
Unstoppable AI
This sounds like a very plausible argument to me. From what I've observed, once a hot technology captures the public's imagination, there's little that can stop it from growing and spreading.
Even if AI companies don't experience the monster growth many people once anticipated, they should still do very well if their products and/or services are appealing. Broadcom indisputably ticks that box, so I'd say its stock looks like a buy.
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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool recommends Broadcom. The Motley Fool has a disclosure policy.
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