Is This Nancy Pelosi's Stock Pick Set To Overtake Nvidia? AI Chip Race To Heat Up By 2025

Fund manager Stephen Yiu of Blue Whale Growth Fund has forecasted that Broadcom Inc. AVGO will yield substantial returns for investors by 2025, potentially surpassing AI chip heavyweight Nvidia Corporation NVDA.

What Happened: Yiu said that tech giants like Microsoft Corporation MSFT, Amazon.com, Inc. AMZN, Google LLC GOOGL, and Meta Platforms Inc. META are looking to broaden their AI chip supplier base. Despite their substantial purchases of Nvidia’s GPUs, these companies are now also creating their own custom chips for AI applications, CNBC reported on Monday.

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Yiu sees Broadcom as the next Nvidia in terms of potential outperformance, thanks to its strong partnerships with major tech firms.

“Nvidia's GPUs are very powerful, but at the same time also very expensive,” Yiu noted. “From Microsoft's perspective, you don't want to become overly dependent on one single supplier.”

Broadcom’s year to date returns have climbed 103.42% this year, as of Monday pre-market hours, according to Benzinga Pro. It hit a market cap of over $1 trillion after announcing that its AI revenue tripled to $12.2 billion in 2024. The company is working with three major cloud computing customers, Meta, Alphabet, and ByteDance, to develop custom AI chips.

Despite still holding an investment in Nvidia, Yiu has significantly cut it from nearly 10% of his fund's portfolio. He views Broadcom as a more attractive investment opportunity due to its smaller size.

“For a $1 trillion company to grow 50% to become $1.5 trillion is reasonable. But for Nvidia to do that, they would need to add another $1.5 trillion, which is a very big number,” he elaborated.

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Why It Matters: Broadcom’s CEO Hock Tan has expressed strong confidence in the sustainability of the AI boom. Big tech companies like Google, Meta, and ByteDance are investing heavily in designing custom processors to accelerate the training and deployment of AI systems. Even OpenAI and Apple have partnered with Broadcom to develop their AI server chips, diversifying their exposure to Nvidia.

Kurv Investment Management’s CEO Howard Chan recently mentioned that chipmakers like Nvidia and Broadcom are leading the AI wave. He noted that demand is outstripping supply in this sector, benefiting chipmakers and cloud computing service providers.

Former House Speaker Nancy Pelosi (D-Calif.), known for her active stock market investments as a member of Congress, disclosed in June that she had acquired call options on Broadcom. These options, adjusted to a strike price of $80 after a 10-for-1 stock split, are set to expire in June 2025.

Pelosi, a widely followed Congressional trader, has drawn significant attention to her stock holdings, inspiring dedicated Pelosi portfolio trackers.

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