According to Bank of America, Broadcom is the next stock that could join the trillion-dollar club

• Broadcom could be the next stock to reach a trillion-dollar market cap, according to Bank of America.

• The chipmaker’s shares are rising after quarterly earnings beat expectations.

• Strong sales, debt paydown and lucrative acquisitions should maintain the company’s momentum, BofA said.

Chipmaker Broadcom appears to be a contender to become the next member of the stock market’s billion-dollar club, Bank of America said Thursday.

Investors cheered the semiconductor maker in Thursday trades after it posted outpacing earnings and announced a 10-for-1 stock split. Shares soared, hitting an all-time high of $1,696 around 11 a.m. ET.

Bank of America thinks Broadcom has even greater potential even after its big quarterly report. In a note published Thursday, analysts raised the company’s price target to $2,000, indicating an upside of about 18% from current levels.

“We reiterate Buy, consider it a top AI pick (with NVDA) because AVGO appears to be uniquely positioned to grow in: 1) custom AI chips (complementing NVDA vendor accelerators), 2) Ethernet networking ( used for exponentially growing AI clusters), and 3) VMware upsell (enables enterprises to deploy AI on premises),” the bank said.

Broadcom is among a cohort of semiconductor makers that have been buoyed by the artificial intelligence frenzy because their chips are used to power the underlying software. $3.1 billion in revenue during the second quarter of the fiscal year was tied to AI products, the report said.

Strong sales prospects also helped Broadcom rise Thursday, as it forecast revenue of $51 billion this fiscal year, slightly above consensus.

Bank of America sees this momentum continuing. For fiscal 2025, it raised its sales forecasts to $59.9 billion, or a 16% increase year over year. Upside drivers include semiconductor sales and Broadcom’s VMWare, a software company it acquired last year.

“Second, we note AVGO’s debt repayment ($8 billion per year), which could create more room for further M&A next year. Third, double-digit FCF growth in FY24 could enable another 10% dividend increase could make by the end of the FY,” analysts wrote. .

If Bank of America’s price target comes true, Broadcom would join an exclusive group of stocks with a market cap of trillions of dollars. The newest member of the club is Nvidia, the semiconductor leader that was catapulted to sky-high valuations thanks to its central role in the AI ​​wave.

Nvidia has risen even further in recent months, joining Microsoft and Apple the $3 trillion mark.

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