Broadcom rises as $100 billion AI forecast signals gains in Nvidia -dominated market
March 5 (Reuters) – Broadcom (AVGO.O), hares rose nearly 3% on Thursday after the company predicted over $100 billion in AI chip sales next year, signaling rapid share gains in the market dominated by Nvidia.
Big Tech’s push to secure the vast computing power needed for artificial intelligence has lifted Broadcom in the data-center infrastructure race as it helps design custom processors that can serve as an alternative to Nvidia’s costly chips.
Alphabet (GOOGL.O), Microsoft (MSFT.O),Amazon (AMZN.O), and Meta (META.O), are expected to spend more than $600 billion to build AI infrastructure this year, boosting demand for chips, servers, storage and networking equipment.
Broadcom, which supplies semiconductors and infrastructure software, has visibility for about 10 gigawatts worth of AI demand in 2027 from its clients such as Anthropic and Meta Platforms, Melius Research analysts said.
This demand equates to the power consumption needs of more than 8 million U.S. households.
The volumes put Broadcom closer to the scale of recent AI chip deals by Nvidia and AMD (AMD.O), as the rise of custom processors, known as ASICs, increasingly threatens Nvidia’s stronghold in the advanced data-center infrastructure market.
DISPELLING AI FEARS
Both Broadcom and its rival, Nvidia, have seen their stocks decline so far this year amid investor concerns around whether heavy spending on AI will generate sufficient returns to justify lofty tech valuations.
Summit Insights analysts said in a note on Wednesday,
While investors continue to discuss the sustainability of AI capex growth, our industry research suggests the opportunity for Broadcom is broadening rather than peaking,
Thursday’s jump could add over $42 billion to Broadcom’s market value if gains hold.
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Broadcom rises as $100 billion AI forecast signals gains in Nvidia -dominated market, source
