Financial experts have rated this company as the next Nvidia; what's the reason and should you invest?

Wall Street darling and AI Chip making giant Nvidia is enjoying dream run in the US Stock Market. Now another custom AI Chips manufacturer -- Broadcom Inc --with more than $1 trillion in market value is witnessing unprecedented boom. Broadcom Inc share price at Nasdaq closed at USD 224.31 on January 10, Nvidia ended at USD 135.91 on Friday.

Broadcom has become a go-to supplier for big technology companies looking to reduce their dependence on pricey, supply-constrained AI processors made by front-runner Nvidia by developing their own advanced custom chips. That has pushed Broadcom's shares up more than 62 per cent so far this year.

Broadcom has association with tech giants Meta, Google, and ByteDance.


Earlier in December, CEO Hock Tan said that he expected the AI market to present a revenue opportunity between $60 billion and $90 billion for fiscal 2027, adding that Broadcom had won two major hyperscaler customers, which refers to large cloud firms.

The company said it captured more than $12 billion of the total serviceable AI revenue of between $15 billion and $20 billion in fiscal 2024. This includes both its custom AI chips as well as the networking equipment used in data centers.

"Extrapolating this ~70% market share to FY 2027 would imply AI revenue exceeding $50 billion," TD Cowen analysts estimated.

The $60 billion to $90 billion revenue opportunity "is difficult to prove/disprove, but is huge", they added. Broadcom's 12-month forward price-to-earnings ratio is 29.8, compared with Nvidia's 31.03 and Marvell's 41.14.

FAQs

Q1. What are prime AI chipmakers?
A1. Prime AI chipmakers are Nvidia and Broadcom.

Q2. What are share prices of Nvidia and Broadcom?
A2. Broadcom Inc share price at Nasdaq closed at USD 224.31 on January 10, Nvidia ended at USD 135.91 on Friday.