California-based AMD is a global semiconductor leader that designs GPUs, microprocessors, and high-performance computing solutions for fast-growing industries such as gaming, data centers, and AI. The company’s technology plays a role in the lives of billions of people every day, powering everything from Fortune 500 companies to advanced scientific research that changes how the world lives, works, and plays.Bank of America (BAC) analyst Vivek Arya highlighted the potential challenge, noting that neither Met ...

Core Insights - Broadcom has entered a multiyear partnership with OpenAI to develop custom AI accelerators, enhancing its position in the AI market [1][4] - Broadcom is the second-largest supplier of AI accelerators, with a significant market share in Ethernet switching and high-end ASICs [1][6] - The partnership with OpenAI is expected to contribute to Broadcom's revenue growth, with projections of $60 billion to $90 billion by fiscal 2027 [2][7] Company Developments - Broadcom is currently building custom AI chips for three hyperscale companies, with an estimated annual revenue of $60 billion to $90 billion by fiscal 2027 [2] - A fourth significant customer has placed orders totaling $10 billion, speculated to be OpenAI [3] - The partnership will involve co-developing 10 gigawatts of custom AI accelerators, with deployment expected from the second half of 2026 through 2029 [4] Market Position and Projections - Broadcom's share of the AI accelerator market is projected to increase from 6% today to 14% by 2030, while Nvidia's share is expected to decrease from over 80% to 67% [6] - Broadcom is on track to earn $13 billion in custom AI accelerator revenue in fiscal 2025, with potential growth of 115% to 163% over the next two years [7] Valuation Concerns - Despite the growth potential, Broadcom's stock is trading at 91 times earnings, indicating a high valuation compared to its forecasted 30% annual earnings growth [8] - The price-to-earnings-to-growth (PEG) ratio exceeds 3, suggesting the stock may be overvalued [8] Competitive Landscape - Nvidia remains the dominant player in the AI accelerator market, with a lower total cost of ownership for its systems [10] - Broadcom collaborates with major companies like Google and Meta Platforms, but Nvidia's established ecosystem and R&D investment present significant competitive barriers [11][12]