The artificial intelligence (AI) revolution has turned Nvidia into a household name, with its stock soaring and its GPUs becoming the gold standard for AI training. But while Nvidia grabs headlines, another semiconductor giant is quietly powering the AI infrastructure behind the scenes: Broadcom (AVGO).
Often overshadowed by Nvidia’s dominance in AI chips, Broadcom plays a pivotal role in the AI ecosystem—and its stock has been a stealth winner in the AI boom. Here’s why Broadcom might be the AI industry’s best-kept secret.
1. Broadcom’s AI Chip Business Is Booming
While Nvidia leads in GPUs, Broadcom is a key supplier of custom AI accelerators for tech giants like Google, Meta, and Microsoft. Its application-specific integrated circuits (ASICs) are critical for hyperscalers building their own AI chips to reduce reliance on Nvidia.
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Google’s TPUs (Tensor Processing Units) are designed in partnership with Broadcom.
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Meta’s MTIA (Meta Training and Inference Accelerator) chips rely on Broadcom’s ASIC expertise.
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Microsoft’s Maia AI chips, developed with OpenAI, are also powered by Broadcom.
According to analysts, Broadcom’s AI-related revenue could hit $10 billion in 2024, up from just $3 billion in 2022—a staggering growth trajectory.
2. Networking Chips: The Unsung Hero of AI Data Centers
AI models require massive data centers with ultra-fast connectivity. Broadcom dominates the high-speed networking chip market, supplying:
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Ethernet switches (used in AI server clusters)
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PCIe switches (critical for GPU-to-GPU communication)
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Optical interconnect solutions (enabling faster data transfer)
With AI workloads demanding low-latency, high-bandwidth networking, Broadcom’s solutions are indispensable—making it a hidden enabler of AI infrastructure.
3. VMware Acquisition: A Strategic AI Play
Broadcom’s $69 billion acquisition of VMware (completed in late 2023) positions it as a leader in cloud and enterprise virtualization—key for AI deployment.
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VMware’s private AI solutions allow companies to run AI models on-premises.
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Broadcom can now offer end-to-end AI infrastructure, from chips to cloud software.
This integration strengthens Broadcom’s role in enterprise AI adoption, a market expected to explode in the coming years.
4. Strong Financials & Shareholder Returns
Unlike many high-growth tech firms, Broadcom is highly profitable and rewards shareholders:
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Consistent dividend growth (now yielding ~1.6%)
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Aggressive stock buybacks (over $40 billion since 2018)
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Strong free cash flow ($20 billion+ annually)
With AI driving demand for its products, Broadcom’s earnings are expected to keep climbing.
Conclusion:
While Nvidia gets the spotlight, Broadcom is the backbone of AI infrastructure, supplying the chips and networking tech that make AI possible. Its diversified business—spanning custom AI chips, networking, and cloud software—makes it a low-risk, high-reward play on the AI boom.