JPMorgan analysts revealed in a recent note that Broadcom has secured the design contract for Google’s upcoming TPU v7 artificial intelligence chip. This partnership marks the seventh generation of AI chips that Broadcom has collaborated on with Google, showcasing their long-standing relationship in this sector. The analysts mentioned that Broadcom’s success with Google reflects a trend of increased investment in AI technology by the tech giant.
The report predicts that Broadcom will see a substantial revenue boost from Google’s TPU program, estimating over $8 billion in revenue for this year with a projected increase to over $10 billion by 2025. This growth is mainly attributed to the anticipated release of the TPU v5 and v6 chips. Additionally, the analysts highlighted Broadcom’s collaboration with Meta Platforms, noting that Broadcom played a crucial role in designing Meta’s first and second-generation AI training processors. They anticipate that the production of Meta’s third-generation AI chip, MTIA 3, will ramp up in late 2024 and into 2025.
Overall, JPMorgan analysts forecast that Broadcom’s AI revenue will reach $11 billion to $12 billion in 2022 and surpass $14 billion to $15 billion by 2025, positioning Broadcom as a key player in the global AI semiconductor market. The report emphasizes Broadcom’s dominant position in the custom chip design market, particularly in advanced technologies such as 7nm, 5nm, 3nm, and 2nm chips. The company is estimated to hold a 55-60% market share in this segment, serving major tech companies like Apple, Microsoft, and Meta.
In light of these developments, JPMorgan reiterated its Overweight rating on Broadcom (AVGO) stock, indicating confidence in the company’s future growth prospects. The analysts’ insights shed light on Broadcom’s strong position in the AI chip market and its potential for continued success through strategic collaborations with industry leaders like Google and Meta Platforms.
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