In an impressive second quarter performance, Broadcom (AVGO) exceeded earnings and revenue estimates, leading to a surge in its stock prices by 12%. The company's success is attributed to its position in the rapidly growing market of custom artificial intelligence (AI) chips.

Broadcom reported earnings of $10.96 per share for the second fiscal quarter, surpassing the LSEG consensus estimate of $10.84 per share. Moreover, the company's revenue reached $12.49 billion, outperforming the projected $12.03 billion. This positive momentum has prompted Broadcom to revise its sales forecast for fiscal year 2024 to approximately $51 billion, slightly higher than analysts' consensus of $50.42 billion.

Analysts view Broadcom as a vital player in the expanding AI infrastructure sector, alongside Nvidia. Goldman Sachs analysts continue to recommend purchasing AVGO stock, predicting an 8% potential upside with a 12-month price target of $1,850. They also highlight Broadcom's ability to grow in custom AI chips, strengthening its position in the market.

Echoing similar sentiments, Bank of America analysts reaffirmed a buy rating on Broadcom and emphasized its top AI pick status. They expect Broadcom to benefit from the increased investments in AI and its expertise in custom AI chips and Ethernet networking. Additionally, the analysts believe Broadcom can leverage its partnership with VMware to expand its reach in enterprise AI deployments.

Broadcom's impressive performance also prompted the company to announce a 10-for-1 stock split, aiming to make its shares more accessible to investors. The split-adjusted shares will commence trading on July 15th.

As artificial intelligence continues to shape various industries, Broadcom's success in the custom AI chips market positions it as a beneficiary of this growing trend. With strong financials and an optimistic sales outlook, the company remains poised for future growth.

CNBC's Michael Bloom contributed to this report.

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