Broadcom Inc. (NASDAQ:AVGO) stock traded higher on Thursday as investors cheered a fresh wave of optimism around AI infrastructure spending.
Alphabet's Massive CapEx Boost Lifts Broadcom
The stock climbed in late trading on Wednesday after Google parent Alphabet Inc. (NASDAQ:GOOGL) sharply raised its capital spending outlook, signaling a surge in demand for AI infrastructure.
Alphabet beat fourth-quarter estimates and stunned markets by projecting $175 billion to $185 billion in capital expenditures for 2026, far above expectations of roughly $115 billion.
The higher forecast points to heavy investment in data centers, AI hardware, and cloud infrastructure.
Ben Reitzes of Melius Research told CNBC that the capex spend would be a positive catalyst for Broadcom and other names associated with Alphabet.
Broadcom's Key Role In Google's Custom AI Chips
Google runs much of its AI software on its own tensor processing units rather than relying solely on Nvidia Corp (NASDAQ:NVDA) chips.
Broadcom plays a key role in helping Google design and produce those TPUs, including the hardware used to train advanced models like Gemini.
Broadcom has also expanded its custom AI chip business, developing specialized Application-Specific Integrated Circuits (ASICs) for major hyperscalers and even selling Google's TPU-based Ironwood systems to AI lab Anthropic.
Jefferies reiterated its Buy rating and $500 price forecast on Broadcom, saying the company remains strongly positioned to benefit from rising AI and networking demand.
The firm called Google's higher capital spending plans a major endorsement of continued AI investment, alongside funding momentum from players like OpenAI, xAI, and Oracle Corp (NYSE:ORCL).
Jim Cramer Highlights Diversification As Tech Volatility Hits
CNBC's Jim Cramer said this week's market volatility shows why investors need diversification, as tech-heavy portfolios have taken the hardest hit. He noted that many technology stocks no longer look as valuable as investors once believed, partly because AI has pushed enterprise software out of favor.
Cramer pointed to the sharp sell-off in chipmakers like Advanced Micro Devices, Inc (NASDAQ:AMD), Broadcom, and Micron Technology, Inc (NASDAQ:MU), along with continued weakness in software names such as Oracle.
Meanwhile, he highlighted strength in other sectors, including consumer staples, health care, banks, and industrials.
He said these "old economy" companies offer earnings, dividends, buybacks, and more reasonable valuations compared with tech, and investors have started rewarding them with gains.
AVGO Price Action: Broadcom shares were up 3.32% at $318.27 at the time of publication on Thursday, according to Benzinga Pro data.
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