Fund manager Steven Yu says Broadcom will deliver greater returns to investors than AI chip leader Nvidia in 2025 as big technology companies seek to reduce dependence on a single supplier. It is said that there is a high possibility. Yiu, a portfolio manager at the Blue Whale Growth Fund, said Big Tech giants like Microsoft, Amazon, Google, and Metaplatform bought up a lot of Nvidia’s graphics processing units (GPUs), but now they are also developing their own GPUs. He said that Custom chips for artificial intelligence applications to diversify. “Broadcom is not Nvidia, but we expect Broadcom to be the next Nvidia in terms of outperforming potential simply because Broadcom works so closely with big tech companies,” Yiu said. said on CNBC’s Pro Talks on Wednesday. “Nvidia’s GPUs are very powerful, but they’re also very expensive,” Yiu added. “From Microsoft’s perspective, we don’t want to be too dependent on a single supplier.” AVGO YTD Mountain Broadcom’s stock has soared more than 126% this year, with artificial intelligence revenue more than tripling to 12.2 billion in 2024 USD, with a market value of over $1 trillion. This stock is one of the top 10 positions in Blue Whale. Broadcom CEO Hock Tan said the company is developing custom artificial intelligence chips with its three biggest cloud computing customers, identified by analysts as Meta, Alphabet and ByteDance. revealed. Tan predicted that these customers will each deploy 1 million artificial intelligence chips in networked clusters by 2027. Yiu maintains his investment position in Nvidia, but has significantly reduced it from nearly 10% of the fund’s portfolio. “The problem is the possibility of outperformance from here,” Yui explained. “I don’t expect NVIDIA to double from here over the next two years. From a law of large numbers perspective, that’s very difficult.” What Wall Street sees Wall Street analysts also think about Broadcom’s outlook I’m getting more and more bullish about it. Goldman Sachs raised its price target on the company’s stock from $190 to $240 in a Dec. 15 report, citing “even greater confidence in the company’s future sales and earnings growth prospects.” Morgan Stanley analysts called Broadcom “one of the most compelling moves.” Bernstein analysts, on the other hand, have a price target of $250. But Bank of America warned of potential risks from “intense competition from NVDA’s strongholds in commercial silicon and enterprise customers.” Nvidia continues to dominate artificial intelligence chips, with a market value of $3.2 trillion this year and a stock price increase of more than 165 percent. Yu believes Broadcom offers better investment opportunities because of its smaller size. “It’s reasonable for a $1 trillion company to grow 50% to $1.5 trillion, but NVIDIA needs to add another $1.5 trillion to make that happen,” he said. .This is a very large number.” The shift in spending on artificial intelligence chips comes as major technology companies seek to optimize their massive investments in artificial intelligence infrastructure. Broadcom’s custom chips, known as XPUs, are unlike Nvidia’s graphics processing units and are designed specifically for each customer’s needs. The company’s growing artificial intelligence business is part of a diverse portfolio, including networking components used to connect thousands of artificial intelligence chips, and after its recent $69 billion acquisition of VMware. Includes a substantial software department. Taking Profit Broadcom stock has risen more than 30% this month alone, meaning the CNBC Investment Club has become more cautious about the stock. Portfolio analysis director Geoff Marks said the club would have cut the position if given permission. “While the market is technically oversold, which means we are more buyers than sellers, if there were no restrictions, we would sell 100 shares of Broadcom stock on Monday.” “While we remain bullish on AI’s long-term prospects as outlined by CEO Hock Tan in last week’s earnings call, our discipline allows us to ring the register and book profits on the stock’s impressive 115% rise this year. “We’re downgrading it to a 2,” Marks said. —CNBC’s Ari Levy, Ashley Capoot and Michael Bloom contributed reporting.
Investors say Broadcom is the best AI chip stock to own in 2025
By NvidiaDaily
