Broadcom's (AVGO) fiscal Q1 results should provide relief to investors amid concerns over artificial intelligence market conditions, Morgan Stanley said in a note Friday.

The company reported fiscal Q1 non-GAAP earnings of $1.60 per diluted share, up from $1.10 a year earlier, as revenue rose to $14.92 billion from $11.96 billion.

Morgan Stanley highlighted AI networking as a key driver, with Broadcom's Ethernet AI segment growing 40% quarter-over-quarter. AI revenue totaled $4.1 billion, exceeding the company's prior guidance of $3.8 billion, and is expected to grow to $4.4 billion next quarter.

However, recovery in non-AI semiconductor segments remained slow, with non-AI revenue down 9% sequentially.

The investment firm also noted the potential of Broadcom's application-specific integrated circuits or ASIC in AI as the company disclosed two potential new customers for the chips, adding to 3 confirmed customers and 2 previously disclosed prospects.

Morgan Staley raised its price target on Broadcom's stock to $260 from $246, while maintaining an overweight rating.

Shares of Broadcom were up 3% in recent trading.

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