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Written by Danny Vena for The Motley Fool->
Broadcom stock rose after Palantir reported robust results.
This helps support the contention that strong demand for AI continues.
As a key player in the space, Broadcom benefits from the ongoing adoption of AI.
Shares of Broadcom (NASDAQ: AVGO) climbed on Tuesday, rising as much as 4.1%. As of 2:43 p.m. ET, the stock was still up 3.7%.
While there was no company-specific news driving the gains, the catalyst that sent the semiconductor specialist higher was robust results from another key player in artificial intelligence (AI) -- Palantir Technologies (NASDAQ: PLTR).
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Palantir delivered what was arguably its best quarterly financial performance ever, and investors see that as a signal that Broadcom's stellar run could continue.
In the first quarter, Palantir generated revenue that rose 85% year over year to $1.63 billion, driving adjusted earnings per share (EPS) to $0.33, up 154%.
For context, analysts' consensus estimates called for revenue of $1.54 billion and adjusted EPS of $0.28, so Palantir surpassed both estimates by a wide margin.
The results for the company's U.S. commercial segment were even more impressive, as revenue surged 133% to $595 million, driven by strong demand for its Artificial Intelligence Platform (AIP). Results for the U.S. government segment were also robust, as revenue grew 85% to $687 million.
Broadcom isn't scheduled to report its second-quarter results until June 3, but investors see Palantir as an important proxy for ongoing AI demand.
Moreover, since Broadcom released its Q1 results, the company has announced expanded collaborations with Alphabet and Meta Platforms. Broadcom is a key architect in the design and production of Google's Tensor Processing Units (TPUs) and is helping develop Meta's Training and Inference Accelerator (MTIA) chips.
Taken together, the available information suggests strong demand for AI. Finally, at 23 times next year's expected earnings, Broadcom provides investors with a picks-and-shovels way to invest in the AI revolution.
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Danny Vena, CPA has positions in Alphabet, Broadcom, Meta Platforms, and Palantir Technologies. The Motley Fool has positions in and recommends Alphabet, Broadcom, Meta Platforms, and Palantir Technologies. 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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