Broadcom shares are experiencing a notable uptick following Alphabet's announcement of a substantial increase in its capital expenditure forecast for 2025. Alphabet, a significant customer for Broadcom, revealed plans to spend $75 billion on capital expenditures this year, significantly surpassing the market's expectation of $57.9 billion. This unexpected boost in spending is particularly beneficial for Broadcom, as Alphabet accounts for approximately 9% of its sales, primarily through the supply of AI chips. The news has been well-received by investors, as it signals robust demand for Broadcom's products in the AI sector.
The increased capital expenditure by Alphabet is part of a broader trend among major tech companies, which are ramping up their investments in AI infrastructure. This development alleviates concerns about potential cutbacks in AI chip purchases, especially after recent market jitters caused by a new competitor's claims of a more efficient AI model. Broadcom's position as a key supplier to Alphabet places it in a favorable spot to benefit from this surge in spending, further solidifying its role in the AI supply chain.
Broadcom (AVGO) shares are up 3.29% to $229.75 as of 6:41 am on February 5th, compared to its previous close of $222.43 on February 4th.