Shares of Broadcom Inc. are up 68% in the past year, but even with that big rally, some Wall Street analysts still see the chip stock as a top pick.

The company's momentum in the past year has been "materializing better than we expected," analysts at Melius Research said in a note on Wednesday, as they reflected on how they initiated coverage around this point last year.

Broadcom $(AVGO)$ is set for accelerating sales of its artificial-intelligence chips, the Melius team said, including custom AI accelerators and networking chips. The analysts see a compound annual growth rate of 43% for AI chips through 2027.

And Broadcom stands to see higher profits from its ownership of VMware, a cloud-computing business, because of its existing status as a market leader. Broadcom Chief Executive Hock Tan "has created a portfolio of high-margin and sticky assets," the analysts said. Broadcom acquired the VMware business in 2023.

According to Melius, Broadcom is "still one of the 'must-own' AI stocks," as it leads among fabless chip providers in several areas, including networking. As the company's customer base grows and AI hyperscalers focus on developing reasoning models, the company's switching business, which makes up about 30% of its total AI revenue, "should accelerate as well over the next few years as AI clusters scale out."

Broadcom counts Google $(GOOGL)$, Meta $(META)$, ByteDance and OpenAI as customers for its custom AI chips. Melius believes Apple $(AAPL)$, SoftBank-owned Arm $(ARM)$ and Elon Musk's companies could be among new hyperscaler customers for Broadcom's custom AI chips, "lending upside to AI semis estimates even after 2027."

Because Broadcom can offer customers chips for both high performance and cost-effective performance for AI training and inferencing, the company is "uniquely" positioned to benefit in the long run from a major chunk of the market for AI computing hardware, the analysts said.

Mizuho Securities analysts shared similar sentiments, calling Broadcom's stock a top pick for 2025 in a note late Tuesday. The company's plans for AI custom silicon are expected to drive "significant market-share dominance," the analysts said.

Since launching its coverage of Broadcom, Melius said customers for the company's AI application-specific integrated circuits grew from three to seven - "each with a capability of spending [tens] of billions of dollars annually."

The Melius analysts raised their estimates for fiscal years 2026 and 2027, as they see room for the company to positively surprise relative to the consensus view. The analysts said they "believe it is possible for both Nvidia $(NVDA)$ and Broadcom to win at the same time."