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

Broadcom Shares rose 11.1% on Monday, making them even larger Standard & Poor’s 500 Today’s top performer, as investors returned to many of the leading technology companies associated with AI trading. Wall Street is also taking notice of the chip maker as a derivative play alphabet The increasing dominance of artificial intelligence.

Broadcom — one of the largest suppliers of high-performance application-specific chips, or hyperscale ASICs — has been on a tear this year, up 60% year-to-date. Monday’s rally saw Broadcom have its best day since April 9. The stock was also the best performing stock Technology Sector SPDR Fund (XLK)which tracks the technology sector of the S&P 500 Index.

The move at Broadcom comes as investors continue to push into shares of Google’s parent company alphabet higher. The stock rose more than 5% as AI trading recovered some of its recent losses.

The two are connected through ASICs: Google is a major customer of Broadcom’s ASIC business, with Broadcom helping to design and manufacture Google’s tensor processing units (TPUs). These are specialized AI chips within Google, which are used in the company’s internal AI infrastructure. The Google TPU is a competitor to Nvidia’s GPUs for AI workloads.

Analysts have recently raised their expectations for Broadcom due to enthusiasm about its relationship with Alphabet.

Melius Research’s Ben Reitzes last month reiterated his buy rating on Broadcom and raised his price target on the stock by $60 to $475, suggesting a potential upside of 39.6% from Friday’s close.

“Google and partner Broadcom have been collaborating on this custom ASIC since 2016, and it is now in its seventh generation. Beyond the Nvidia GPU for AI workloads, the TPU is the most proven ASIC ever – and now has measurable momentum. The decision to develop this product early has started the upside – providing Broadcom AI revenue and Google Cloud (GCP) growth,” Reitzes wrote in a statement. October 27 Note to customers.

“While it’s good for Alphabet, it could be even better for Broadcom, which could see a significant increase in its AI revenue with Alphabet and a host of other partners that want a piece of that design expertise,” he continued, adding that “TPU is quickly becoming a bigger part of Alphabet’s growth strategy.”

Jefferies analyst Blayne Curtis, who has the highest price target among analysts on Broadcom, per LSEG, named the stock a top pick earlier this month and said ASICs are reaching an “inflection point” as Google’s need for custom chips continues to grow.

“Google has long been a major ASIC client for AVGO but these volumes should become more significant in C26/27,” Curtis wrote in a November 3 note. “Google continues to see the number of tokens it processes monthly rise, announcing 1,300 trillion in October up from 480 trillion in April 2025. This should grow even more given the need for computing for multi-modal models.”

Curtis gave the stock a buy rating and raised his price target by $65 to $480. This means the stock could jump another 41%.

Dan Ives, global head of technology research at Wedbush Securities, told CNBC he is very bullish on Broadcom and Alphabet. Ives owns both shares in Dan Ives Wedbush AI Revolution ETF (IVES).

“Broadcom and Alphabet are the new AI play as the market rediscovers the huge market for ASIC chips with Google leading the way,” he said. “This may be the most proven ASIC chip on the market and the AI ​​revolution is still in its early days… It has been a historic turnaround for extremely bullish street sentiment today.

Alphabet shares have risen 21% over the past month, outperforming their “Magnificent Seven” peers and pushing the broader market higher in recent trading sessions. Investors have reacted positively to Google’s latest news artificial Intelligence Model Gemini 3, that it The upcoming seventh generation TPU is called “Ironwood”, Its developments in the field of AI image generation with Nano Banana Pro and its new proxy platform called “Google Antigravity”.