Once-obscure chipmaker Broadcom has enjoyed a record-setting rally that’s pushed its market capitalization inches behind Warren Buffett’s Berkshire Hathaway conglomerate and its portfolio of household names and economic bellwethers. Palo Alto, California-based Broadcom is a semiconductor supplier to Apple and other major tech companies. Its devices can run the sorts of AI applications that have enthralled investors over the past two years, and Broadcom also works with Alphabet ‘s Google, which partially designs its own AI chip called a TPU. A strong earnings report last week sparked a rally in Broadcom, driving its June gains to more than 35%. When Broadcom hit an all-time high earlier this week, its market capitalization briefly surpassed drug maker Eli Lilly’s. As of Tuesday’s close, Broadcom had a market cap of $839 billion, right behind Eli Lilly’s $845 billion and Berkshire’s $882 billion. Omaha-based Berkshire is currently No.7 in market value, after a cluster of megacap technology giants. Berkshire Class A shares have gained 13% this year, less than the S & P 500. Many investors are excited about the prospect that the old-economy conglomerate — owner of BNSF Railway , Geico Insurance and Dairy Queen — could be the next to join the trillion dollar club, and the only non-technology company to do so in the U.S. (Overseas, PetroChina and Saudi Aramco are the only two companies with a market cap above $1 trillion.) But it may take longer for that to happen in this tech bull market with little AI-exposure beyond its large Apple holding. Big AI beneficiary Broadcom, meanwhile, is seeing strong demand from customers in need of high-capacity chips that can power complex AI applications. Broadcom said $3.1 billion in sales during the current quarter could be attributed to revenue from AI products. “Talking of AI accelerators, you may know our hyperscale customers are accelerating their investments to scale up the performance of these clusters,” Broadcom CEO Hock Tan said on the latest earnings call. “And to that end, we have just been awarded the next-generation custom AI accelerators for these hyperscale customers of ours.” Bank of America, which reiterated a buy rating on the chipmaker, said Broadcom has a pathway to “join the trillionaires club.” The Wall Street firm said Broadcom’s chips have diversified exposure to secular product cycles in a wide range of industries including smartphone, cloud data centers, telecommunications and enterprise storage markets. Interactive Brokers Chief Strategist Steve Sosnick said Broadcom captures the zeitgeist of the moment and should replace Tesla in the ” Magnificent Seven .” Morgan Stanley last week resumed research coverage of Broadcom with an overweight rating, with the investment bank citing synergies from Broadcom’s VMware acquisition, which closed in late 2023 .
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