TLDR:
- Broadcom leads in custom AI chip business for specific workloads.
- Strong relationships with key customers give Broadcom a competitive advantage.
Broadcom Likely To Keep Custom AI Chip Lead
Broadcom is leading in making custom AI chips optimized for specific workloads, a market where Nvidia is not as dominant. The company’s status as the top maker of application-specific integrated circuits (ASICs) for AI jobs has contributed to the rise in Broadcom stock. JPMorgan analyst Harlan Sur believes that Broadcom’s strong relationships with key customers give it an advantage in the AI ASIC business. He reiterated his buy rating on Broadcom stock with a price target of 200.
AI Chip Business Looks Solid
Broadcom’s AI chip business is expected to have strong momentum due to continued data-center spending by cloud service providers. It is estimated that Broadcom could have a cumulative revenue opportunity of $150 billion over the next four to five years from its large AI customers. This suggests a compound annual growth rate of 30% to 40% in AI semiconductor revenue.
Broadcom Stock Price Target Hike
TD Cowen analyst Matthew Ramsay raised his price target on Broadcom stock to 210 from 175, citing improved business in non-AI semiconductor sectors. The stock is on two IBD lists and has a perfect IBD Composite Rating of 99. Despite recent market fluctuations, the outlook for Broadcom stock remains positive.