Broadcom Inc (AVGO  ) shares were climbing in trading on Monday, just days after JPMorgan analyst Harlan Sur named the company as the top AI semiconductor supplier behind NVIDIA Corp (NVDA  ).

The company is likely to report a modest beat when it releases its fiscal second-quarter results on June 12, according to BofA Securities.

The Broadcom Analyst: Vivek Arya maintained a Buy rating and price target of $1,680 on the stock.

The Broadcom Thesis: The company is likely to reiterate its fiscal 2024 sales outlook of around $50 billion, with strength in AI offsetting headwinds in the legacy segment, Arya said in the note.

On the previous earnings call, Broadcom had raised its AI outlook to over $10 billion, from its prior forecast of $7.5 billion, and there seems to be another $1 billion upside to these estimates, given the custom chip ramps at Google-parent Alphabet Inc (GOOG  ) (GOOGL  ), Meta Platforms Inc (META  ) and TikTok-parent ByteDance, the analyst stated.

"AVGO's success with VMWare Inc (VMW  ) renewal activity could also boost estimates," the analyst wrote.

Arya stated, however, that more custom chips could spell gross margin pressure. "While rising AI tide creates room for both current leader AVGO and others, it's hard to ignore the emerging threat from NVDA's Ethernet switch, including in network interface cards, as part of NVDA's 100K GPU cluster," he added.

AVGO Price Action: Shares of Broadcom had risen by 2.57% to $1,441.69 at the time of publication on Monday.