Broadcom’s artificial intelligence (AI) chips have propelled the company into the $1 trillion market capitalization club, alongside Nvidia. The growth of AI spending is driving the surge, with Broadcom’s networking chips and custom AI accelerators in high demand from hyperscalers like Alphabet, Meta Platforms, and ByteDance.
The company’s AI semiconductor segment is expected to grow at a compound annual rate of over 60% and could account for a quarter of Broadcom’s total revenue by 2025. Analysts predict 28% earnings growth next year and 20% growth in 2026, driven by the increasing adoption of AI chips.
Broadcom’s networking chips are essential infrastructure for AI data centers, with companies like Alphabet and ByteDance paying billions for Nvidia’s GPUs while seeking Broadcom’s chips to optimize processing power. The company’s custom AI accelerator business is also gaining traction, with management estimating an addressable market of between $60 billion and $90 billion by 2027.
The Motley Fool recommends investing in Broadcom, citing its strong growth prospects and significant upside potential. However, investors should consider the risks, including the uncertainty of continued rapid AI spending growth.
Source: https://finance.yahoo.com/news/meet-newest-artificial-intelligence-ai-130500879.html