TSLA
Tesla
-- 436.170 MU
Micron Technology
-- 87.090 NVDA
NVIDIA
-- 130.680 QUBT
Quantum Computing
-- 15.140 AMD
Advanced Micro Devices
-- 118.880 
【Column】Broadcom's AI breakthrough may not necessarily be a threat to NVIDIA (1)
Investors' column "Hard on the Street"
＊＊＊
An Artificial Intelligence (AI) semiconductor manufacturer has emerged with a Market Cap of $1 trillion (approximately 154 trillion yen). On the other hand, pioneering companies that have already reached $1 trillion are also maintaining strong performance.
US semiconductor giant Broadcom, in its earnings reports for the 8-10 month period (Q4), included a long-term outlook for its AI business, which became a driving factor for the stock price to exceed $1 trillion in Market Cap. This seemed to have an opposite impact on NVIDIA, the US leader in AI semiconductors. In the 2 trading days after the earnings reports, Broadcom's stock price rose by 38%, while NVIDIA dropped by about 4%.
The difference between the two companies remains significant. NVIDIA's Market Cap stood at approximately $3.3 trillion at the end of trading on the 16th, while Broadcom was around $1.2 trillion. However, Broadcom also leads in some aspects. The stock price-earnings ratio based on the company's next 4 quarters of performance has exceeded 38 times due to the recent sharp increase in stock price.peIn 2023, the company's overall sales volume of 18,000 kiloliters, +28.10% year-on-year, significant growth. Product structure, 10-30 billion yuan products operating income of 401/1288/60 million yuan respectively.
There are sufficient reasons for investors to have high expectations for Broadcom's future. The company's semiconductor business is diverse, with several areas related to the thriving AI market. Broadcom occupies a significant position in supplying network processors that connect equipment within data centers, such as NVIDIA's semiconductor clusters. Furthermore, when major technology companies like Google under the Alphabet umbrella and Meta Platforms Inc design their own AI semiconductors for data center use, Broadcom becomes an important partner.
Broadcom's custom AI semiconductors, also known as ASICs, can handle some AI-related tasks similar to NVIDIA products. Therefore, the strong forecast provided by Broadcom's CEO Hock Tan last week, who is often cautious regarding outlooks, could also be interpreted as a concern for NVIDIA's future growth. Tan stated during an earnings call with analysts that the top three tech giants, which are Broadcom's major customers, are expected to invest $60 billion to $90 billion in ASICs and network equipment by the fiscal year ending October 2027. In the AI semiconductor market, Broadcom is involved in these two areas.
Broadcom does not believe it can monopolize this demand. Tan acknowledged the company's perception of the 'Serviceable Addressable Market (SAM).' However, Tan's remarks were perceived to imply a significant increase in Broadcom's AI-related revenue, which was $12.2 billion in fiscal year 2024, in the coming year.
Jefferies analyst Brain Curtis stated that even if Broadcom achieves the lower limit of the SAM, it is expected that the earnings per share will exceed $12 by the calendar year 2027.
Broadcom's adjusted earnings per share in fiscal year 2024 was $4.87. US-based Marvel Technology, which competes with Broadcom in custom ASICs for major tech companies like Amazon, is also experiencing significant growth. Marvel's revenue is expected to increase by 40% in the January 2026 period.
However, the need for leading NVIDIA semiconductors is not completely offset by these in-house semiconductors. Google and Amazon, prominent in the semiconductor field, often emphasize their ties with NVIDIA in their semiconductor endeavors.
Google CEO Sundar Pichai stated in a recent earnings call, "We have a great partnership with NVIDIA."
Bernstein analyst Stacy Rasgon stated in an interview, "It's not a zero-sum game." Resource-rich tech giants can design semiconductors that carry out specific advanced tasks more efficiently than external semiconductor providers. However, such semiconductors lack flexibility, as stated by Rasgon, who emphasized that "there is no free lunch."
(Continued)
＊＊＊
An Artificial Intelligence (AI) semiconductor manufacturer has emerged with a Market Cap of $1 trillion (approximately 154 trillion yen). On the other hand, pioneering companies that have already reached $1 trillion are also maintaining strong performance.
US semiconductor giant Broadcom, in its earnings reports for the 8-10 month period (Q4), included a long-term outlook for its AI business, which became a driving factor for the stock price to exceed $1 trillion in Market Cap. This seemed to have an opposite impact on NVIDIA, the US leader in AI semiconductors. In the 2 trading days after the earnings reports, Broadcom's stock price rose by 38%, while NVIDIA dropped by about 4%.
The difference between the two companies remains significant. NVIDIA's Market Cap stood at approximately $3.3 trillion at the end of trading on the 16th, while Broadcom was around $1.2 trillion. However, Broadcom also leads in some aspects. The stock price-earnings ratio based on the company's next 4 quarters of performance has exceeded 38 times due to the recent sharp increase in stock price.peIn 2023, the company's overall sales volume of 18,000 kiloliters, +28.10% year-on-year, significant growth. Product structure, 10-30 billion yuan products operating income of 401/1288/60 million yuan respectively.
There are sufficient reasons for investors to have high expectations for Broadcom's future. The company's semiconductor business is diverse, with several areas related to the thriving AI market. Broadcom occupies a significant position in supplying network processors that connect equipment within data centers, such as NVIDIA's semiconductor clusters. Furthermore, when major technology companies like Google under the Alphabet umbrella and Meta Platforms Inc design their own AI semiconductors for data center use, Broadcom becomes an important partner.
Broadcom's custom AI semiconductors, also known as ASICs, can handle some AI-related tasks similar to NVIDIA products. Therefore, the strong forecast provided by Broadcom's CEO Hock Tan last week, who is often cautious regarding outlooks, could also be interpreted as a concern for NVIDIA's future growth. Tan stated during an earnings call with analysts that the top three tech giants, which are Broadcom's major customers, are expected to invest $60 billion to $90 billion in ASICs and network equipment by the fiscal year ending October 2027. In the AI semiconductor market, Broadcom is involved in these two areas.
Broadcom does not believe it can monopolize this demand. Tan acknowledged the company's perception of the 'Serviceable Addressable Market (SAM).' However, Tan's remarks were perceived to imply a significant increase in Broadcom's AI-related revenue, which was $12.2 billion in fiscal year 2024, in the coming year.
Jefferies analyst Brain Curtis stated that even if Broadcom achieves the lower limit of the SAM, it is expected that the earnings per share will exceed $12 by the calendar year 2027.
Broadcom's adjusted earnings per share in fiscal year 2024 was $4.87. US-based Marvel Technology, which competes with Broadcom in custom ASICs for major tech companies like Amazon, is also experiencing significant growth. Marvel's revenue is expected to increase by 40% in the January 2026 period.
However, the need for leading NVIDIA semiconductors is not completely offset by these in-house semiconductors. Google and Amazon, prominent in the semiconductor field, often emphasize their ties with NVIDIA in their semiconductor endeavors.
Google CEO Sundar Pichai stated in a recent earnings call, "We have a great partnership with NVIDIA."
Bernstein analyst Stacy Rasgon stated in an interview, "It's not a zero-sum game." Resource-rich tech giants can design semiconductors that carry out specific advanced tasks more efficiently than external semiconductor providers. However, such semiconductors lack flexibility, as stated by Rasgon, who emphasized that "there is no free lunch."
(Continued)
Disclaimer: Community is offered by Moomoo Technologies Inc. and is for educational purposes only.
Read more
Comment
Sign in to post a comment