AVGO

Why Broadcom, Micron, and Intel Stock Are Jumping Today

Top semiconductor stocks are climbing again in Thursday's daily trading session. Broadcom (NASDAQ: AVGO), Intel (NASDAQ: INTC), and Micron Technology (NASDAQ: MU) were up 3.6%, 3.7%, and 4%, respectively, as of 3 p.m. ET, according to data from S&P Global Market Intelligence.

Before the market opened today, Mizuho published a note on Nvidia stock and raised its one-year price target from $850 per share to $1,000 per share. The positive analyst coverage had helped send the artificial intelligence (AI) leader's share price roughly 3.5% higher in the daily session as of this writing -- and the bullish news had spillover benefits for other top chip stocks. But Broadcom, Micron, and Intel are also enjoying their own company-specific valuation tailwinds today.

Intel is racking up wins with the U.S. military

According to a report published by Bloomberg today, Intel is on track to score another big public-sector win. The report states that the U.S. government is poised to invest $3.5 billion in the company to aid the production of chips that will be used for military and intelligence purposes.

With concerns that China will soon move to exercise greater control over Taiwan, other world powers are trying to secure new sources for high-performance semiconductors. Currently, Taiwan Semiconductor Manufacturing accounts for roughly 60% of the global contract chip market -- and 90% of the market when it comes to the kinds of advanced chips used for AI and other accelerated-computing processes.

If China were to tighten its hold on Taiwan, it could result in major supply chain disruptions, urgent security issues, and dramatically negative impacts on the global economy. Due to these risks, the U.S. and other Western allies have been moving to ramp up alternative chip-production capabilities.

Intel has emerged as a leading beneficiary of this trend and looks poised to see chip fabrication for third-party customers become a driving force of new growth. Matching Taiwan Semiconductor's production capabilities will take years, even in optimistic scenarios. Still, it's increasingly clear that Intel will have major public-sector backing aiding its pursuits in the fab space.

Stifel raises its rating on Micron stock

In a note published before the market opened today, Stifel upgraded its rating on Micron Technology stock from hold to buy. The firm also increased its one-year price target on the stock from $80 per share to $120 per share.

Stifel cited favorable demand trends for DRAM, paving the way for stronger near-term business and stock performance for Micron. In particular, the firm thinks the current midpoint endpoints for the company's business performance in 2025 will wind up proving far too low. Between improving business results and a backdrop that will pave the way for the stock to see valuation-multiple expansion, the firm believes the stock has plenty of room to run. If the stock were to hit the new price target, it would mean additional upside of roughly 20% over its current pricing level.

Mizuho raised the firm's price target on Broadcom to $1,550 from $1,450 and kept a buy rating on the shares. The analyst is taking a longer-term look at the AI and custom silicon landscape. The firm cites positive AI custom silicon and ethernet tailwinds for the target increase. It sees further multiple expansion with numerous catalysts ahead.

Mizuho is also increasingly bullish on Broadcom

In addition to publishing a bullish note on Nvidia stock today, Mizuho championed Broadcom. The firm maintained a buy rating on the stock and raised its one-year price target from $1,450 per share to $1,550 per share. The stock currently trading at roughly $1,397 per share would imply an additional upside of roughly 11% within the next year.

As with Nvidia, Mizuho cited rising demand for custom AI chip designs and new ethernet tailwinds as reasons for raising its price target. Along with expectations for improving business in the near term, the firm expects that the improving long-term outlook will make investors willing to assign higher valuation multiples to the stock.

While the market will undoubtedly see some unexpected twists and turns, there's a lot to like about the long-view outlook for the semiconductor industry right now. In addition to positive catalysts stemming from the emergence of new AI technologies, it's a virtual certainty that chips will continue to play an increasingly important role in global economic activity and everyday life. Taking a broad-based approach to top companies in the semiconductor could be a smart move for long-term investors.

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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia and Taiwan Semiconductor Manufacturing. The Motley Fool recommends Broadcom and Intel and recommends the following options: long January 2023 $57.50 calls on Intel, long January 2025 $45 calls on Intel, and short May 2024 $47 calls on Intel. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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