Bernstein Upgrades Broadcom (AVGO) and Nvidia (NVDA) Amid Surging AI Chip Demand

Key Highlights

Table of Contents

Bernstein’s Stacy Rasgon assigns outperform ratings to Broadcom and Nvidia, with the firm holding shares in both
Broadcom shares jumped 4.7% following the publication of Rasgon’s optimistic analysis on AI semiconductor stocks
Rasgon projects both companies could reach approximately 15x forward earnings multiples, indicating substantial growth potential
AMD receives a neutral stance from Bernstein, which seeks more concrete evidence of organic customer demand
Accelerating AI infrastructure buildout is tightening memory availability and elevating component pricing across the industry

Bernstein analyst Stacy Rasgon released an optimistic report on artificial intelligence semiconductor stocks Monday, propelling Broadcom shares 4.7% higher during morning trading. Rasgon assigned outperform ratings to both Broadcom and Nvidia, while disclosing that Bernstein maintains equity positions in these companies.

NVIDIA Corporation, NVDA

According to Rasgon, artificial intelligence demand “currently shows no signs of slowing.” He characterized Broadcom’s current market valuation as “absurdly attractive” when evaluated against the company’s expansion prospects.

Broadcom posted a 16% revenue increase in its most recent quarterly report, accompanied by a remarkable 173% surge in profitability. The stock has declined approximately 22% from its December 2024 peak of $413 per share.

Trading around $324 per share, Broadcom currently commands a valuation of approximately 60 times historical earnings. Rasgon anticipates earnings per share reaching $20 or higher by 2027, which would translate to a forward multiple below 16 times those projected figures.

Such a scenario would reflect approximately 400% earnings expansion over a two-year period — equivalent to roughly 100% annual growth. Rasgon suggested that current Wall Street forecasts for both Broadcom and Nvidia may be underestimating actual potential.

Bernstein Favors Nvidia and Broadcom While Taking Neutral Stance on AMD

Bernstein establishes a distinct separation between its preferred investments and those it views with reservation. While both Nvidia and Broadcom receive favorable assessments, Advanced Micro Devices does not share this status.

Rasgon noted that AMD has recovered from its recent price lows. However, Bernstein is seeking more definitive indicators that customers are purchasing AMD processors driven by authentic demand rather than simply responding to constrained availability from rival suppliers.

Absent more reliable evidence of sustainable growth momentum, Bernstein indicates a preference to maintain a neutral position on AMD. The research firm stops short of issuing a sell recommendation but equally refrains from endorsing the stock.

AI Infrastructure Expansion Creates Supply Chain Challenges

Robust artificial intelligence demand is beginning to generate complications in adjacent technology sectors. The explosive growth in data center deployment is constraining memory chip availability and driving component costs upward.

Markets including personal computers and mobile devices are experiencing pressure as data center operators consume increasing capacity. Escalating input costs are also beginning to compress profit margins throughout various technology industry segments.

Rasgon recognized these supply chain dynamics but emphasized they do not alter his positive perspective on Nvidia or Broadcom. Both organizations remain strategically positioned in his assessment, with underlying demand patterns continuing to show strength.

Bernstein confirmed ownership of equity positions in both Nvidia and Broadcom as of its research note published Monday, March 24.

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