Broadcom's market value soared by 250 billion yuan, or it may sit in the second place after NVIDIA

"Science and Technology Innovation Board Daily" on December 12 (edited by Zheng Yuanfang) On Monday local time, the Philadelphia Semiconductor Index rose 3.40%, hitting a new high since January 5, 2022.

It is worth noting that the most significant increase was Broadcom, which rose 9% in a single day, the largest one-day increase since May, and its stock price hit a record high. Broadcom's latest market capitalization is US$424.8 billion, with a single-day market value rise of US$35.1 billion, or about 252 billion yuan.

In the current wave of AI, in addition to the limelight Nvidia, the market has also begun to gradually realize the growth potential of Broadcom.

In its latest research report, Citi reinstated its coverage of Broadcom, assigned a "buy" rating, and raised its price target to $1,100, expecting Broadcom to reach up to $60 EPS in 2025. The report pointed out that for Broadcom, the benefits of artificial intelligence are more than enough to offset the downturn in the semiconductor industry, and the company's core business strength and the growth from the acquisition of VMware are expected to drive its stock price higher.

In terms of ASICs, Broadcom has participated in the design of each generation of Google's TPU processors, and the latter is also a major customer of Broadcom's custom computing offload ASIC business. In addition, Broadcom also revealed in a recent conference call that it has reached cooperation with more large companies. Due to the recent good news from Marvell and MediaTek, analysts believe that Broadcom is expected to get more potential orders for ASICs.

In terms of Ethernet switches, according to Broadcom data, more than $200 million of Ethernet switches have been applied in the AI field in fiscal 2022, which will grow to $800 million in fiscal 2023 and further double to $1.6 billion to $2 billion in fiscal 2024. Although Nvidia's InfiniBand has a 90% market share in the AI network market, analysts still believe that Broadcom is expected to maintain its share and advantage due to the open design and low cost of Ethernet, and customers tend to shift from Nvidia's exclusive supply to diversified supply.

VMware, a cloud infrastructure and mobile business solutions provider, is the world's fourth-largest systems software company and a global leader in virtualization and cloud infrastructure. Broadcom expects VMware's business to grow at a double-digit CAGR.

Citi noted that Broadcom could directly benefit from AI demand and become the second-largest semiconductor company after Nvidia. In its network business, the revenue from AI infrastructure is expected to grow from $4 billion in 2023 to $8 billion in 2024, an increase of up to 100% year-on-year.

▌AI strongly boosted the performance and stock price of related chip companies

Of course, not only Broadcom, but also chip giants, especially AI chip-related giants, have achieved relatively strong gains in recent days: for example, AMD has risen by more than 15% in the past three days, and Nvidia has risen by nearly 8% in the same period.

Among them, AMD has just launched the flagship data center AI chip AMD Instinct MI300XGPU, and at the same time revised the CAGR of the data center accelerator market size from 40% to 70% in the next four years, that is, it is expected to grow from $30 billion in 2023 to more than $400 billion in 2027, and AMD expects the MI300X series to ship about 300,000-400,000 units in 2024, and the largest customers are Microsoft, Google, if it were not for the limited TSMC CoWoS production capacity shortage and Nvidia had already booked more than 40% of the production capacity, the series of shipments is expected to be revised upward.

This year's AI boom triggered by ChatGPT has put Nvidia on the throne of "semiconductor first" in one fell swoop - under the frenzied demand for computing chips, Nvidia's revenue has surpassed the two giants Intel and TSMC. The above-mentioned stock price performance of Broadcom and AMD also further confirms the strong role of AI in boosting the performance and stock prices of related chip companies.

As TSMC Wei Zhejia said, semiconductors are the key to the development of AI applications, not only to continue to develop AI technology and improve computing power, but also to focus on reducing energy consumption.

After reviewing the semiconductor industry cycle, Dongxing Securities pointed out that there will be a certain degree of "long whip effect" in the semiconductor industry in 2022. After each round of "long whip effect", the new technology leader finds a new engine to drive the growth of the industry and lead the wave of industry innovation. Since 2023, AI has driven the growth of demand in downstream industries, and it is expected that AI is expected to maintain medium- and long-term growth in 3-5 years.

In the specific direction, Kaiyuan Securities believes that AI has brought a variety of innovations, and the demand for supporting links related to computing power servers is strong in the short term, and the importance of localization continues to increase, so it is recommended to pay attention to the relevant link targets that benefit from the increase in computing power demand; in the long term, it is recommended to pay attention to the application and landing of AI at the edge, and the AI terminal of intelligent interaction upgrade is expected to become an important driving force for industrial demand, and is optimistic about the ODM and brand owners of related SoC chip manufacturers and related terminals.

(Science and Technology Innovation Board Daily, Zheng Yuanfang)