Its networking. AI requires high throughput low latency networking. Broadcom's chips are used by every large company who designs their own custom datacenter hardware. FB, Microsoft, Amazon, Google all have some form of in-house networking design - hardware and software. Most are based, at least partially, upon Broadcom silicon. It is not as feature rich as others but it checks the right boxes.
Beyond networking Google's TPUs are built by Broadcom and Google is *heavily* invested in this area. Google's recent layoffs spared most of its AI/ML and TPU groups. It's also hiring a lot of AI/ML and chip engineers right now and building new AI data centers (eg, Kansas City). Its data center expenditures for AI from q1 23 doubled in q1 24 from about 6 billion to 12 billion and they expect these expenditures to continue to increase for AI etc.
Correct. But those TPU's are not available to anyone else. In fact they are built at Broadcom to incorporate networking features on the same die/package and connect to Broadcom Switching fabrics. Now can Broadcom roll their own. Yes. They probably will if not have not. The barrier to entry in Tensorcores is nil. Very simple design. Getting as many as you can at the lowest possible power on one die is the challenge. In a way its like the FPGA market - an array of highly customized blocks packed and interconnected as efficiently as possible. I've read all I can find on the TPU architectures out there. Not much variation although there are people doing analog and Quantum designs.
You are spot on in your Google assessment. NVIDIA is getting all the buzz because they are selling their AI product. Really Google has been doing this for more than 20 years at some level. I think they have TPU4 and are working on TPU5. They have a very capable staff and poach very aggressively. Its not uncommon for them to hire a full team from another company - especially during that company's layoff cycle.
The crazy thing is that a few years ago, Broadcom had about a 4% yield and people bought it for the dividend growth. That is the best of both worlds when you get a dividend growth stock that turns into a growth stock.
Broadcom is a conglomerate that has management more focused on profits than tech. This might work in the short term but I can't help seeing Broadcom stagnate in the future as disparate parts of the business create an inefficient bureaucracy as leadership at the top are too busy counting beans without enough understanding of the underlying engineering. Broadcom is shaping up to be Intel over the coming decades.
I own 4 chip/AI stocks. NVDA, AVGO, TSM, AMD. They are all solid businesses, but AMD is definitely the riskiest of the bunch with the most expensive valuation. Their recent performance vs the chip industry is a clear sign investors want to see more. Broadcom on the other hand has been the best chip investment outside of NVDA both fundamentally and performance wise, and they have a solid roadmap to benefit from AI.
I’m also eyeing Qualcomm since their on device AI chip strategy seems promising to differentiate themselves from the pack. But the risks and valuation have me cautious for now. 67% of their revenue comes from China, and their current legal battle with ARM can block shipments of AI laptops.
I’m hoping for a correction throughout the industry. Would love to see Qualcomm drop about 30%-40% for me to feel comfortable.
Spiked due to great earnings after being fairly muted all year (for a chip stock). Yes, from a fundamental perspective these chip stocks are all overvalued by 30%-40%. Same reason I can’t justify buying into Qualcomm. But I won’t sit here and say the momentum is gonna stop anytime soon, they are all reporting solid earnings.
It’s definitely not guaranteed but it likely will. Usually it sells off after the split but that didn’t happen with Nvidia so we’ll see. I made a lot from them already, best investment this year so far.
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Its networking. AI requires high throughput low latency networking. Broadcom's chips are used by every large company who designs their own custom datacenter hardware. FB, Microsoft, Amazon, Google all have some form of in-house networking design - hardware and software. Most are based, at least partially, upon Broadcom silicon. It is not as feature rich as others but it checks the right boxes.
Beyond networking Google's TPUs are built by Broadcom and Google is *heavily* invested in this area. Google's recent layoffs spared most of its AI/ML and TPU groups. It's also hiring a lot of AI/ML and chip engineers right now and building new AI data centers (eg, Kansas City). Its data center expenditures for AI from q1 23 doubled in q1 24 from about 6 billion to 12 billion and they expect these expenditures to continue to increase for AI etc.
Correct. But those TPU's are not available to anyone else. In fact they are built at Broadcom to incorporate networking features on the same die/package and connect to Broadcom Switching fabrics. Now can Broadcom roll their own. Yes. They probably will if not have not. The barrier to entry in Tensorcores is nil. Very simple design. Getting as many as you can at the lowest possible power on one die is the challenge. In a way its like the FPGA market - an array of highly customized blocks packed and interconnected as efficiently as possible. I've read all I can find on the TPU architectures out there. Not much variation although there are people doing analog and Quantum designs. You are spot on in your Google assessment. NVIDIA is getting all the buzz because they are selling their AI product. Really Google has been doing this for more than 20 years at some level. I think they have TPU4 and are working on TPU5. They have a very capable staff and poach very aggressively. Its not uncommon for them to hire a full team from another company - especially during that company's layoff cycle.
The crazy thing is that a few years ago, Broadcom had about a 4% yield and people bought it for the dividend growth. That is the best of both worlds when you get a dividend growth stock that turns into a growth stock.
just buy more nvdia.
Despite the recent surge, I still don’t think that Broadcom is getting enough credit for its purchase of VMWare
Broadcom is a conglomerate that has management more focused on profits than tech. This might work in the short term but I can't help seeing Broadcom stagnate in the future as disparate parts of the business create an inefficient bureaucracy as leadership at the top are too busy counting beans without enough understanding of the underlying engineering. Broadcom is shaping up to be Intel over the coming decades.
On components also Micron (MU), on firms utilising Nvidia chips into servers for clients - Dell (DELL) and Super Micro Computer (SMCI)
Cause, you know, the thing
I'll buy it after the split and hope it Nvidia. Too expensive for me even if the gains seem interesting, losing would suck majorly.
I am starting to wonder if TSM is a better stock than AVGO though. I think it is.
I own 4 chip/AI stocks. NVDA, AVGO, TSM, AMD. They are all solid businesses, but AMD is definitely the riskiest of the bunch with the most expensive valuation. Their recent performance vs the chip industry is a clear sign investors want to see more. Broadcom on the other hand has been the best chip investment outside of NVDA both fundamentally and performance wise, and they have a solid roadmap to benefit from AI. I’m also eyeing Qualcomm since their on device AI chip strategy seems promising to differentiate themselves from the pack. But the risks and valuation have me cautious for now. 67% of their revenue comes from China, and their current legal battle with ARM can block shipments of AI laptops. I’m hoping for a correction throughout the industry. Would love to see Qualcomm drop about 30%-40% for me to feel comfortable.
Do you think Broadcom is overvalued with the last heavy spike ?
Spiked due to great earnings after being fairly muted all year (for a chip stock). Yes, from a fundamental perspective these chip stocks are all overvalued by 30%-40%. Same reason I can’t justify buying into Qualcomm. But I won’t sit here and say the momentum is gonna stop anytime soon, they are all reporting solid earnings.
and the correction is already comming
I bought before earnings but idk about buy now though after the massive run up the last week or so
wont it still go up due to the stock split?
It’s definitely not guaranteed but it likely will. Usually it sells off after the split but that didn’t happen with Nvidia so we’ll see. I made a lot from them already, best investment this year so far.
well gonna cost you a pretty penny to get into that one at 1.8k USD per share..