TLDR
- Bernstein analyst Stacy Rasgon rates both Broadcom and Nvidia “outperform” and owns both stocks
- Broadcom surged 4.7% after Rasgon published a bullish note on AI chip stocks
- Rasgon says both stocks could trade at around 15x forward earnings, suggesting upside
- Bernstein is cautious on AMD, wanting clearer proof of real customer demand
- Rising AI demand is straining memory supply and pushing component costs higher
Bernstein analyst Stacy Rasgon published a bullish note on AI chip stocks Monday, sending Broadcom up 4.7% in early trading. Rasgon rated both Broadcom and Nvidia “outperform” and confirmed Bernstein holds positions in both companies.
Rasgon said AI demand “currently shows no signs of slowing.” He described Broadcom’s valuation as “absurdly attractive” given its growth trajectory.
Broadcom reported a 16% rise in sales last quarter, with profits jumping 173%. The stock has fallen about 22% since hitting highs of $413 per share in December 2024.
At around $324 per share, Broadcom trades at roughly 60 times trailing earnings. Rasgon projects earnings per share of $20 or more by 2027, which would put the stock at under 16 times those forward estimates.
That would represent roughly 400% earnings growth over two years — around 100% growth each year. Rasgon said current analyst estimates for both Broadcom and Nvidia may still be too low.
Bernstein Backs Nvidia and Broadcom, Stays Cautious on AMD
Bernstein draws a clear line between the stocks it favors and those it does not. While Nvidia and Broadcom both get positive ratings, Advanced Micro Devices does not.
Rasgon said AMD has bounced back from recent lows. But Bernstein wants clearer signs that customers are buying AMD chips because of genuine demand, not just because supply from competitors is limited.
Until there is more consistent evidence of growth, Bernstein says it prefers to stay on the sidelines on AMD. The firm is not calling AMD a sell, but it is not recommending it either.
AI Demand Is Creating Pressure Elsewhere in Tech
Strong AI demand is starting to cause problems in other parts of the market. A surge in data center activity is tightening memory supply and pushing component prices higher.
Sectors like PCs and smartphones are beginning to feel the squeeze as data centers take up more capacity. Rising costs are also starting to affect margins across parts of the tech market.
Rasgon acknowledged these pressures but said they do not change his outlook on Nvidia or Broadcom. Both companies remain well-positioned in his view, with demand trends still intact.
Bernstein confirmed it holds positions in both Nvidia and Broadcom as of the note published Monday, March 24.
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