TLDRs;
- Broadcom rises after sector shakeup, Nvidia outlook lifts AI chip sentiment
- Meta-AMD deal rattles chip stocks but Broadcom shows resilience in trading
- Investors watch software renewals and data-center deals for next catalysts
- Broadcom’s quarterly earnings in March could determine stock trajectory
Broadcom (AVGO) shares climbed 2.1% on Wednesday, continuing their upward trajectory with a 0.4% gain in after-hours trading to $333.52.
Investors drew confidence from Nvidia’s recent strong outlook, which bolstered sentiment across the AI hardware space. The broader Philadelphia Semiconductor index rose 1.6%, highlighting the resilience of chipmakers despite headline-grabbing deals that temporarily shifted market focus.
Nvidia’s performance is widely seen as a bellwether for the sector. With artificial intelligence driving demand for high-end chips, analysts are closely watching which companies are best positioned to supply data centers and hyperscale computing operations. Broadcom, with its robust networking gear and custom silicon, stands at a strategic crossroads for this next phase of growth.
Meta-AMD Deal Shakes Market Confidence
The sector faced turbulence earlier this week after reports revealed AMD had secured Meta Platforms as a major customer for custom AI chips, a deal valued at roughly $60 billion. Broadcom shares had dipped about 2% in response, as market participants weighed the potential impact of losing a prominent hyperscale client.
Meta also obtained warrants giving it the option to acquire up to 10% of a new AMD division involved in the project, signaling its long-term commitment to in-house and specialized chip supply. Analysts noted that such moves underscore the competitive environment for AI chip contracts, where a single major customer can influence multiple vendors’ fortunes.
Software Renewals and Infrastructure Growth
Beyond hardware, Broadcom’s software segment remains a key focus for investors. Concerns persist over upcoming VMware contract renewals, which could see increased churn in 2026 and 2027. UBS analysts highlighted this risk even as they maintained a Buy rating with a $475 price target. Meanwhile, TD Cowen adjusted its target to $405, citing strong AI infrastructure potential but acknowledging the stock’s recent volatility.
The company’s software and infrastructure portfolio, including its VMware and high-end networking offerings, are increasingly viewed as essential pillars for growth. Analysts suggest that the market’s next catalysts may hinge as much on contract renewals and software stability as on hardware demand.
Looking Ahead to Earnings
With Broadcom scheduled to report quarterly results on March 4, investors are positioning ahead of the earnings call at 5 p.m. ET. The upcoming report could either confirm the stock’s recovery or highlight ongoing risks from shifting hyperscaler agreements and competitive AI chip dynamics.
Security considerations have also been highlighted this week. Broadcom’s VMware division issued a high-severity advisory for Aria Operations, confirming that patches are available for three CVEs. While these issues were mitigated, they remind investors that both hardware and software divisions must manage operational risks to sustain growth.
As trading continues, market watchers remain focused on how Broadcom navigates these challenges. The company’s ability to maintain its position in AI infrastructure while mitigating software and contract risks will be critical for sustaining the recent gains that follow the Meta-AMD shakeup.
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