Broadcom ETFs Surge on Strong AI Demand

Shares of Broadcom rocketed higher on Friday after the company reported strong earnings and painted a rosy future for its AI business.

The semiconductor giant was last trading up by 20%, its largest single day gain ever, fueling a nearly 40% spike in the Defiance Daily Target 2X Long AVGO ETF (AVGX).

On Thursday after the closing bell, Broadcom announced earnings and revenue numbers for the third quarter that were largely in-line with analyst estimates.

Broadcom ETFs Boom on AI Demand

However, the firm said that demand for its AI products was booming and that it would continue to see strong demand for the next few years.

Companies like Alphabet, Meta and most recently Apple, have teamed up with Broadcom to build custom AI chips.

Those chips are alternatives to Nvidia’s GPUs, which currently dominate the market and have turned the chipmaker into one of the two largest companies in the world.

Broadcom’s customers hope that their custom chips can reduce their reliance on Nvidia’s GPUs and help save them some money.

This trend has boosted Broadcom’s fortunes and helped to push its market cap past $1 trillion for the first time ever on Friday.

In addition to AVGX, other ETFs that hold substantial weightings in the stock also benefited.

The iShares Semiconductor ETF (SOXX), which holds a 9% position in the stock, was last trading up by 2%; while the Columbia Semiconductor and Technology ETF (SEMI), which has the largest allocation to the name at 15%, was trading up by 2% as well.

There are currently 429 U.S.-listed exchange-traded funds that hold Broadcom in their portfolios, according to etf.com’s stock finder tool. 

In addition to semiconductor-focused ETFs, broad market funds like the Invesco QQQ Trust (QQQ) and the SPDR S&P 500 ETF Trust (SPY) have substantial exposure to the stock, with weightings of 5.1% and 1.7%, respectively.