Broadcom (AVGO) could be in discussions with Microsoft (MSFT)-backed OpenAI for making a new AI chip, according to an exclusive report from The Information. The report suggests that OpenAI, known for creating ChatGPT, has been exploring this idea with Broadcom as part of broader discussions with various chip designers. Additionally, OpenAI has brought on board former Google (GOOGL) employees who previously worked on Tensor processors to support this initiative.
Broadcom- An Important Player in AI
While Nvidia (NVDA) currently leads the AI race, Broadcom is rapidly closing the gap, projecting over $11 billion in AI sales for FY24. In the Fiscal second quarter, Broadcom reported revenues of $12.5 billion, marking a 12% increase year-over-year on an organic basis. This growth was primarily fueled by AI revenue, which soared 280% from the previous year, reaching $3.1 billion.
According to the TipRanks “Bulls Say, Bears Say,” analysts bullish on AVGO expect the company’s AI strategy to focus “on large consumer AI platform customers like Google, Meta, and ByteDance, which are expected to continue investing heavily.”
Meanwhile, Bloomberg reported earlier this year that OpenAI CEO Sam Altman is seeking billions from investors to build a network of semiconductor factories.
Is AVGO a Good Stock to Buy Now?
Analysts remain bullish about AVGO stock, with a Strong Buy consensus rating based on 23 Buys and one Hold. Over the past year, AVGO has surged by more than 80%, and the average AVGO price target of $196.36 implies an upside potential of 22.3% from current levels.
