In a recent development, Broadcom Inc. AVGO is making significant strides in the AI stock market, posing a challenge to Nvidia Corporation NVDA.
What Happened: The report, based on recent interactions with investors in New York and Connecticut, indicates that Broadcom’s specialized AI business is gaining traction, Business Insider reported on Tuesday. The company has been assisting cloud giants like Alphabet GOOGL and Amazon Inc. AMZN in developing customized AI chips for internal use.
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“AVGO is catching up to NVDA as the top holding as AVGO has more AI customers joining (OpenAI and Bytedance) and accretion from VMware,” Citi noted. However, Broadcom’s stock still lags behind Nvidia’s, with a 79% gain in a year compared to Nvidia’s 177%.
The shift in investor sentiment towards Broadcom is significant, given Nvidia’s dominance in the AI stock market. Other semiconductor companies, including NXP Semiconductors and Advanced Analog Devices, are also seeing increased investor interest due to expected inventory replenishments.
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Despite a mixed sentiment, Citi maintains a positive outlook on the semiconductor sector, stating, “We remain wildly bullish on semis.”
Why It Matters: Broadcom is targeting a massive artificial intelligence (AI) silicon market opportunity, worth over $150 billion in the next five years. This positions the tech giant for significant growth, both in the near term and long term.
Broadcom’s dominance in the $5-7 billion data center/AI Ethernet switching and routing chipset market, with a commanding 80% market share. This dominance is largely due to its relentless innovation.
Despite Broadcom’s progress, Nvidia could achieve a market capitalization of nearly $50 trillion within the next decade, according to tech investor James Anderson.
Price Action: On Tuesday, Broadcom was trading 0.11% lower in the pre-market after closing at $161.06 on Monday, according to Benzinga Pro.
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