2025-11-07 01:28Summary of Semiconductor Equity Research Conference Call Industry Overview - The semiconductor industry is experiencing a surge in demand driven by advancements in AI technology and the need for increased computational capacity. Major players are scrambling to secure compute resources to meet this demand [2][4]. Key Companies Discussed - AVGO (Broadcom): Designated as a Top Pick due to significant upside potential in estimates, particularly as ASICs reach an inflection point [3][4]. - NVDA (NVIDIA): Remains a leader in the semiconductor space but is facing challenges due to the law of large numbers [12]. Core Insights and Arguments - AVGO's Growth Potential: - AVGO is expected to see substantial revenue growth, with estimates raised to $100 billion for C26 and $130 billion for C27, compared to previous estimates of $94 billion and $116 billion respectively [15]. - EPS estimates for AVGO have also been increased to $10.31 for C26 and $13.88 for C27 [15]. - The company is expected to benefit from increased demand from Google, Meta, and OpenAI, with a projected revenue upside of nearly $60 billion by 2027 [4][12]. - NVIDIA's Performance: - NVIDIA's revenue estimates for CY26 and CY27 have been raised to $293 billion and $384 billion respectively, with EPS estimates increased to $6.83 and $9.03 [15][12]. - NVIDIA is projected to fulfill $500 billion in orders between 2025 and 2026, indicating strong demand but also highlighting the challenges of scaling [12]. - AI Compute Demand: - Major announcements from companies like Google and OpenAI indicate a growing need for AI compute resources, with Google planning to provide Anthropic access to 1 million TPUs [2]. - The demand for TPUs is expected to rise significantly, with Google processing 1,300 trillion tokens per month as of October 2025, up from 480 trillion in April 2025 [3]. Additional Important Points - Market Dynamics: The current environment is characterized by a non-zero-sum game in the AI compute market, where multiple companies can benefit from the increasing demand [2]. - AVGO's ASIC Roadmap: AVGO's ASICs are expected to ramp up significantly, with Google being a major customer. The anticipated growth in TPU units from 1.5 million in 2025 to approximately 3 million in 2026 reflects this trend [3]. - Removal of NVIDIA from Franchise Picks: NVIDIA has been removed from the Franchise Picks list, indicating a shift in focus towards AVGO as the preferred investment [5]. Financial Projections - AVGO: - Revenue for C27 projected at $130.3 billion, with a significant increase in EPS estimates [15]. - NVDA: - Revenue for CY26 and CY27 projected at $293 billion and $384 billion respectively, with EPS estimates raised to $6.83 and $9.03 [15]. Conclusion - The semiconductor industry, particularly in the AI sector, is poised for significant growth, with AVGO emerging as a top investment choice due to its strong revenue and EPS projections. NVDA continues to lead but faces challenges in scaling its operations amidst increasing competition and demand.