Broadcom is more likely to deliver big gains for investors in 2025 than AI chip leader Nvidia, according to fund manager Stephen Yiu. While Nvidia has dominated the market with its powerful GPUs, Broadcom’s custom chips are gaining traction with major tech giants.
Yiu believes Broadcom’s smaller size makes it a better investment opportunity compared to Nvidia. “For a $1 trillion company to grow 50% is reasonable,” he said. In contrast, Nvidia would need to add another $1.5 trillion to reach that growth milestone.
Broadcom’s stock has surged more than 126 percent this year, reaching a market value of over $1 trillion. The company is developing custom AI chips with three major cloud computing customers, including Meta, Alphabet, and ByteDance. Analysts are bullish on Broadcom’s prospects, with Goldman Sachs raising its price target to $240 from $190.
However, some analysts caution about potential risks from stiff competition against Nvidia in the merchant silicon and enterprise markets. Despite this, Yiu expects Broadcom to outperform Nvidia due to its close ties with big tech companies. “Broadcom is not Nvidia, but we would expect Broadcom to be the next Nvidia in terms of outperformance potential,” he said.
As major technology companies seek to optimize their AI investments, Broadcom’s custom chips are gaining attention. The company’s growth is part of a diverse portfolio that includes networking components and a substantial software division following its recent acquisition of VMware. Despite a 30% rally this month, CNBC’s Investing Club remains bullish on the long-term AI outlook but has trimmed its position to lock in gains.
Source: https://www.cnbc.com/2024/12/23/-the-next-nvidia-broadcom-is-the-ai-chip-stock-to-own-in-2025-investor-says.html