Artificial intelligence could be another business driver for chipmaker Broadcom (AVGO), RBC Capital Markets said Thursday.

Broadcom's custom application-specific integrated circuits could provide upside for the company's stock over the next few years, RBC analyst Amit Daryanani said in a note to clients.

"While investors tend to focus on Broadcom's wireless assets, we think their custom ASIC solutions could unlock further upside especially as we think about revenues over the next 2-4 years," Daryanani said.

Broadcom has been involved in co-designing ASICs for hyperscale enterprise systems to handle artificial intelligence and machine learning workloads. These include projects with Alphabet's (GOOGL) Google, Alibaba (BABA) and Cisco Systems (CSCO), he said.

Daryanani estimates that ASICs for the artificial intelligence market could be a revenue opportunity for Broadcom that's worth $2 billion to $3 billion over the next few years.

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Broadcom has limited competition in the custom ASIC business, Daryanani said. Rivals include STMicroelectronics (STM) and GlobalFoundries.

Daryanani maintainedhis "top pick" buy rating and 270 price target on Broadcom.

Broadcom lost 2.9% to close at 234.04on the stock market today.

Elsewhere in the semiconductor sector Thursday, Oppenheimer reiterated its outperform rating on Monolithic Power Systems (MPWR) after meeting with management this week.

"Tone remains bullish as management outlined the long-term vision for continued outsized (organically driven) growth," Oppenheimer analyst Rich Schafer said in a note to clients.

"Monolithic Power Systems has delivered high-teens annual (percentage) growth the past several years," Schaefer said. "We believe this growth is poised to accelerate as new opportunities in four key vectors take root. These four pillars of growth are high-end notebook, server, game console, and auto. We believe each of these verticals represents about $100 million incremental revenue potential over the next 3 years."

Oppenheimer has a price target of 100 on Monolithic Power.

Monolithic stock fell 1.9% to close at97.12 Thursday.

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Artificial Intelligence Could Be Another Catalyst For Broadcom - Investor's Business Daily