Broadcom(AVGO) The Motley Fool·2024-12-26 09:30Company Overview - Nvidia is a leader in graphics processing units (GPUs) with over 80% market share in AI accelerators, known for accelerating complex workloads like machine learning and AI applications [2] - Broadcom operates in the semiconductor and infrastructure software sectors, with significant market shares of 80% in networking chips and 60% in custom AI chips [14] Financial Performance - Nvidia reported a 94% increase in revenue to 0.81 per diluted share [3] - Broadcom's revenue increased by 51% to 1.42 per diluted share [5] Market Trends - Nvidia's stock has surged 895% since the launch of ChatGPT in November 2022, with 92% of analysts rating it a buy and a median target price of 134 [6] - Wall Street anticipates Broadcom's adjusted earnings to grow by 30% in the next four quarters, making its current valuation of 46 times adjusted earnings appear reasonable [11] Strategic Moves - Stanley Druckenmiller sold his entire stake in Nvidia in Q3 and initiated a new position in Broadcom, which raises questions about his insights into market trends [1][4] - Broadcom's acquisition of VMware contributed 40 percentage points to revenue growth, indicating a strategic move to enhance its market position [10] Future Outlook - Nvidia's adjusted earnings are expected to increase by 50% in the next four quarters, suggesting that its current valuation of 52 times adjusted earnings is relatively cheap [13] - Broadcom anticipates a fivefold increase in AI chip sales to major customers over the next three years, with potential new customers including Apple and OpenAI, indicating strong future growth prospects [15]