With the advent of artificial intelligence (AI), NVIDIA Corporation NVDA has witnessed strong gains driven by incessant demand for its next-generation chips and graphics processing units (GPUs).
However, two semiconductor players, Broadcom Inc. AVGO and Micron Technology, Inc. MU, have recently outperformed NVIDIA, gaining 130.4% and 561%, respectively, over the past year compared to NVIDIA’s gain of 95.4%. Both companies appear to be in a good position for further upside. Here’s why they are strong buys this year –
AI Growth and Key Partnerships Back Broadcom’s Solid Outlook
Banking on rising AI demand, Broadcom posted a consolidated revenue of $19.3 billion in the fiscal first-quarter 2026 and expects about $22 billion in fiscal second-quarter 2026, indicating its strength as a dominant infrastructure player capable of maintaining growth despite its massive size, according to investors.broadcom.com.
Broadcom is growing in strength, mostly due to the company’s AI semiconductor solutions, such as AI networking and custom AI accelerators. For the fiscal first quarter of 2026, Broadcom’s AI revenues were $8.4 billion, up 106% year over year. The company expects AI revenues to reach $10.7 billion in the fiscal second quarter of 2026.
Broadcom has posted an outstanding adjusted EBITDA of $13.1 billion in its fiscal first-quarter 2026, representing 68% of revenues. Similarly, the company expects adjusted EBITDA margin to be 68% of forecasted revenues again in the fiscal second quarter of 2026, highlighting stronger operational efficiency and solid pricing power.
Broadcom’s expanded partnership with Anthropic to build cutting-edge AI chips (TPUs) with Google, delivering 3.5 gigawatts of computing power from 2027 to scale Claude AI, positions the company for strong growth in the future.
As a result, Broadcom’s expected earnings growth rate for the current year is 67.7%.The Zacks Consensus Estimate of $11.44 for AVGO’s earnings per share (EPS) is up 45.9% year over year.
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Brokers are also optimistic about Broadcom’s growth prospects. They forecast the average short-term price target for AVGO stock at $468.11, reflecting a 22.9% increase from the last closing price of $380.78. The highest target is $630, suggesting a potential upside of 65.5%.
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Micron’s AI Memory Demand and Strong Growth Outlook
Micron posted revenues of $23.86 billion in the fiscal second quarter of 2026 and projects it to increase to $33.5 billion in the fiscal third quarter of 2026, according to investors.micron.com. This is because Micron’s AI-focused memory solutions are witnessing a strong demand.
Demand for Micron’s high-bandwidth memory (HBM) chips improved, thanks to their ability to manage heavy workloads more efficiently while using less power. The demand for HBM chips remains robust as hyperscalers keep expanding their AI infrastructure.
Moreover, at present, HBM chips are in limited supply, creating a demand-supply imbalance that would help Micron to push prices higher and gain in the long run. Micron, anyhow, enjoys a strong pricing power for its DRAM and NAND products, supporting revenue growth and margin expansion.
For the fiscal third quarter of 2026, Micron projects a strong gross margin of 81%, signaling solid financial momentum. Thus, the company’s expected earnings growth rate for the current year is nearly 604%. The Zacks Consensus Estimate of $58.36 for MU’s EPS is up 439.9% year over year.
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Brokers, too, are bullish on Micron’s growth prospects. They estimate an average short-term price target for MU stock at $546.09, a 17.3% increase from the last closing price of $465.66.The highest target is $852, suggesting a potential upside of nearly 83%.
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Both Broadcom and Micron currently have a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks Rank #1 stocks here.
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This article originally published on Zacks Investment Research (zacks.com).