Broadcom (AVGO) is advancing 5.5% after the chip maker delivered stronger-than-expected fiscal first-quarter results. The company's revenue outlook for its current quarter also came in significantly above analysts' average outlook.

Morgan Stanley raised its price target on AVGO in the wake of its results.

A technician working at a magnified microscope, developing a new integrated circuit.

The Highlights of AVGO's Q1 Results and Q2 Guidance

Broadcom's sales jumped 25% last quarter to $14.9 billion as the firm benefited a great deal from the AI boom. Analysts on average had predicted that its top line would come in at $14.6 billion. It generated Q1 EPS of $1.60, well above analysts' average estimate of $1.50.

For the current quarter, AVGO expects sales of about $14.9 billion, versus the mean outlook of $14.6 billion.

Broadcom's Comments

AVGO is producing many more chips for the operators of large data centers and raising the amount it's spending on R&D related to these chips, CEO Hock Tan reported on AVGO's earnings call.

The company now has a total of seven customers that operate large data centers, Hock reported, adding that AVGO had recruited two of the firms since Broadcom's last earnings call.

Morgan Stanley Raised Its Price Target

The investment bank raised its price target on AVGO to $260 and kept an Overweight rating on the shares. Morgan Stanley found the strength of the company's AI ethernet business to be "encouraging" and predicts that AVGO will grow rapidly for the "next several years."

While we acknowledge the potential of AVGO, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than AVGO but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks To Invest In According to Billionaires

Disclosure: None. This article is originally published at Insider Monkey.