By Joel Jose and Arshaya Bajwa
March 5 (Reuters) – Broadcom shares rose nearly 3% on Thursday after the company forecast more than $100 billion in AI chip sales next year, signaling a sharp share gain in a market dominated by Nvidia.
Big tech’s push to secure the massive computing power needed for artificial intelligence has lifted Broadcom in the data center infrastructure race as it helps design custom processors that can serve as replacements for expensive Nvidia chips.
Alphabet, Microsoft, Amazon and Meta are expected to spend more than $600 billion this year building AI infrastructure, fueling demand for chips, servers, storage and networking equipment.
Broadcom, which provides semiconductors and infrastructure software, sees about 10 gigawatts worth of AI demand from its customers such as Entropy and MetaPlatforms in 2027, analysts at Milius Research said.
This demand is equivalent to the electricity consumption needs of more than 8 million US households.
The volumes have brought Broadcom closer to the scale of recent AI chip deals by Nvidia and AMD, as the rise of custom processors, known as ASICs, increasingly threaten Nvidia’s power in the advanced data center infrastructure market.
Overcoming the fear of AI
Both Broadcom and its rival, Nvidia, have seen their stocks fall so far this year amid investor concerns about whether heavy spending on AI will generate enough revenue to justify the tech’s high valuations.
“While investors continue to debate the sustainability of AI capex growth, our industry research suggests Broadcom’s opportunity is expanding rather than growing,” analysts at Summit Insights said in a note Wednesday.
Thursday’s jump could add more than $42 billion to Broadcom’s market value if gains are made.
CEO Hock Tan also reassured investors that the company is well-positioned amid widespread supply shortages and limited capacity of memory chips at AI processor maker TSMC.
He said on Wednesday that the company has fully secured capacity for advanced wafers and high-bandwidth memory until 2028.
(Reporting by Joel Jose and Arshya Bajwa in Bengaluru; Editing by Vijay Kishore)
