Broadcom's shares increased by 4.2% following positive data on semiconductor growth driven by artificial intelligence (AI). The semiconductor foundry industry reported a 13% revenue increase in Q1 2025, largely attributed to AI chips, particularly those produced by Taiwan Semiconductor Manufacturing Company (TSMC), which collaborates with Broadcom on custom AI ASICs for major cloud providers. This growth trend suggests a strong sales outlook for Broadcom in the upcoming quarters as foundries typically produce chips ahead of sales.

HSBC analyst Frank Lee raised Broadcom's price target from $240 to $400, indicating a potential 53% upside. This optimistic forecast is based on expectations that Broadcom's AI ASIC revenue will significantly exceed previous estimates, with projections of $28.4 billion in 2026 and $42.8 billion in 2027. However, the stock's premium valuation raises concerns about sustainability, as the target reflects a 10% premium over its historical peak P/E ratio, suggesting that while Broadcom is well-positioned in the AI sector, investors should be cautious.