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Broadcom Inc. (NASDAQ: AVGO) has seen a significant increase of over 77% in the last 12 months, reaching a market capitalization of around $655 billion. The company is a key player in the custom chip (ASIC) market and is the second largest supplier of AI semiconductors globally, following Nvidia Corp. (NASDAQ: NVDA). Analysts have reiterated an Overweight rating on Broadcom with a price target of $1,700, highlighting its dominance in the custom chip market with a market share of 55% to 60%.
Broadcom expects to generate $11 billion in AI-related revenue by 2024, supported by partnerships with tech giants like Google and Meta Platforms Inc (NASDAQ: GOAL). The company has secured deals with Alphabet Inc (NASDAQ: GOOG) for Google’s TPU v7 AI chip and with Meta Platforms Inc for their third-generation AI chip (MTIA 3). These collaborations are projected to drive significant revenue growth for Broadcom in the coming years.
Broadcom is on track to deploy Meta’s third-generation AI ASIC chip in the second half of 2024 and into 2025, with plans for further developments in the following years. The company is expected to generate between $11 billion to $12 billion in total AI revenue in 2024 and $14 billion to $15 billion in 2025. Analysts believe that Broadcom’s focus on custom ASIC solutions for AI computing accelerators gives them a competitive advantage in the market.
However, reports suggest that key contract manufacturer Taiwan Semiconductor Manufacturing Co. (NYSE: SST) may raise prices for their services, potentially impacting the margins of clients like Broadcom. Investors can consider exposure to Broadcom through ETFs such as Amplify Cybersecurity ETF (NYSE: CUT) and Pacer Data and Digital Revolution ETF (NYSE: TRFK).
At the time of writing, AVGO shares were trading down 0.54% at $1,405.49. This information is provided for informational purposes only and does not constitute investment advice.
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