Broadcom, a leading chip supplier, is expected to see a significant increase in its stock price following speculation that the company has secured a major contract with Alphabet for its next-generation AI ASIC accelerator chips. JPMorgan analyst Harlan Sur predicts that this contract could boost Broadcom’s stock by 20% from its current level. Sur estimates that Google’s TPU program, which utilizes Broadcom’s chips, could generate over $8 billion in revenue for the company this year, representing a substantial year-over-year increase. This would mark Broadcom’s seventh collaboration with Alphabet on AI chips. In addition to its partnership with Google, Broadcom also supplies chips to other tech giants such as Microsoft, Apple, and Meta Platforms, positioning it as a key player in the AI semiconductor market.
This year alone, Broadcom’s shares have increased by 25%, and Sur’s price target of $1,700 suggests further growth in the company’s valuation. Looking ahead, Sur anticipates that Broadcom will benefit from its collaboration with Meta Platforms as it prepares to release its third generation of accelerator chips. These projects could potentially generate $11 billion to $12 billion in AI revenue in 2024 and $14 billion to $15 billion in revenue the following year. The increasing demand for customized chip designs, especially among major cloud service providers and OEMs, is expected to drive further growth for Broadcom.
Overall, Broadcom’s strong position in the AI semiconductor market, coupled with its lucrative partnerships and innovative chip designs, makes it a promising investment opportunity. With the potential for substantial revenue growth in the coming years, Broadcom is poised to be a key player in the evolving tech industry landscape. Investors are keeping a close eye on Broadcom’s future developments, as they anticipate a significant uptick in the company’s stock performance.
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https://www.cnbc.com/2024/06/06/this-chip-stock-just-won-a-big-google-contract-and-is-carving-out-its-niche-in-ai.html
