Artificial intelligence stocks were moving higher today as earnings season kicked into full swing and as investors continue to digest the impact of DeepSeek on the AI sector.
Shares of AI giants Broadcom (NASDAQ: AVGO) had moved roughly 4.5% as of 2 p.m. ET, while shares of Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG) had risen about 2.5%. Meanwhile, shares of Marvell Technologies (NASDAQ: MRVL) were up nearly 3%.
A big assist from Meta
Meta Platforms reported its fourth-quarter earnings results after the market closed yesterday, soundly beating analyst estimates. Earnings per share of $8.02 crushed the Street’s consensus estimate of $6.76, while revenue came in $1.4 billion higher than expected.
However, Meta’s results also came with a nice surprise for Broadcom. Meta CEO Mark Zuckerberg said on the earnings call with analysts that the company would spend hundreds of billions on artificial intelligence. Additionally, Meta CFO Susan Li also said, “We’re pursuing cost efficiencies by deploying our custom MTIA (Meta Training and Inference Accelerator) silicon in areas where we can achieve a lower cost of compute by optimizing the chip to our unique workloads.” Meta built its MTIA chips with Broadcom, so investors see this announcement as very bullish for the company.
In potentially other good news for Broadcom, The Wall Street Journal reported late last night that SoftBank is contemplating a $15 billion to $25 billion investment in OpenAI, the creator of ChatGPT. Broadcom in December said it had recently won deals to develop next-generation semiconductor chips for two new companies and analysts think one is OpenAI, so the WSJ report looks like more good news.
Alphabet is benefiting today after two analysts raised their price targets on the company this morning. Analysts at Bernstein increased their price target on the stock from $185 to $210 and maintained a market perform rating on the stock. The analysts believe that Google Search and YouTube will continue to grow nicely, while Alphabet’s cloud services group can potentially turn the company into a winner in the AI space.
Alphabet also caught a price target bump from Oppenheimer analyst Jason Helfstein, who increased his target by $10 to $215 and maintained an outperform rating on the shares. Helfstein said that Meta’s results pave a favorable path for when Alphabet reports earnings next week. He thinks more investors might buy the stock as the company’s AI picture becomes more clear and if investors start to question Meta’s revenue outlook.
While there was no specific news from Marvell, it appears to be moving for the same reasons as Broadcom. Meta’s announcement supports the thesis that tech giants could look to create more tailored chips to meet their AI infrastructure needs. Marvell already does this for some of the biggest tech companies including Alphabet, Amazon, and Microsoft.
Earnings reports keep investors interested in AI
After a big sell-off earlier this week due to the emergence of DeepSeek, earnings reports are keeping investors interested in the AI trade. I think the emergence of DeepSeek has only created more questions about whether AI companies can sustain their elevated valuations, so I am still concerned that these stocks face a high threshold to keep the momentum going.
Of these three stocks — Broadcom, Alphabet, and Marvell — I am most interested in Alphabet, one of the cheaper names in the “Magnificent Seven.” Alphabet has struggled more than peers due to a lawsuit from the Department of Justice that could ultimately force the company to sell its Chrome browser. But I think this outcome is unlikely, and I like the fact that analysts believe the market has yet to fully price in the value of Alphabet’s AI businesses.
