Broadcom Gaining Ground on Nvidia in AI Chip Market, Investor Sentiment Shifts

Broadcom To Challenge Nvidia Dominance? Analyst Says Jensen Huang-Led Chip Giant's Competitor Is 'Catching Up' - Advanced Micro Devices (NASDAQ:AMD), Amazon.com (NASDAQ:AMZN)

In a recent development, Broadcom Inc. AVGO is making significant strides in the AI stock market, posing a challenge to Nvidia Corporation NVDA. What Happened: The report, based on recent interactions with investors in New York and Connecticut, indicates that Broadcom's specialized AI business is gaining traction, Business Insider reported on Tuesday. The company has been assisting cloud giants like Alphabet GOOGL and Amazon Inc. AMZN in developing customized AI chips for internal use. "AVGO is catching up to NVDA as the top holding as AVGO has more AI customers joining (OpenAI and Bytedance) and accretion from VMware," Citi noted. However, Broadcom's stock still lags behind Nvidia's, with a 79% gain in a year compared to Nvidia's 177%. The shift in investor sentiment towards Broadcom is significant, given Nvidia's dominance in the AI stock market. Other semiconductor companies, including NXP Semiconductors and Advanced Analog Devices, are also seeing increased investor interest due to expected inventory replenishments. See Also: Microsoft Blames European Commission Agreement As Reason It Can't Secure Windows Like Apple Secures MacOS After CrowdStrike Outage Despite a mixed sentiment, Citi maintains a positive outlook on the semiconductor sector, stating, "We remain wildly bullish on semis." Why It Matters: Broadcom is targeting a massive artificial intelligence (AI) silicon market opportunity, worth over $150 billion in the next five years. This positions the tech giant for significant growth, both in the near term and long term. Broadcom's dominance in the $5-7 billion data center/AI Ethernet switching and routing chipset market, with a commanding 80% market share. This dominance is largely due to its relentless innovation. Despite Broadcom's progress, Nvidia could achieve a market capitalization of nearly $50 trillion within the next decade, according to tech investor James Anderson. Price Action: On Tuesday, Broadcom was trading 0.11% lower in the pre-market after closing at $161.06 on Monday, according to Benzinga Pro. Read Next: Crowdstrike's Faulty Microsoft Windows Update Gets Slammed By US Cybersecurity Official: 'Was A Huge Deal...' Image via Shutterstock This story was generated using Benzinga Neuro and edited by Pooja Rajkumari Market News and Data brought to you by Benzinga APIs

Investors see Broadcom catching up to Nvidia as the next big AI play, Citi says | Business Insider India

Broadcom is gaining ground on Nvidia as the next hot AI stock among investors, according to a Monday note from Citi. The bank cited recent conversations with investors in New York and Connecticut as evidence that as popular as Nvidia stock is, Broadcom also looks increasingly compelling. The company, which trades under the ticker symbol "AVGO" on the Nasdaq, has specialized its AI business to help cloud companies like Alphabet and Amazon develop their own customized AI chips for internal use. "From our conversations, it seems AVGO is catching up to NVDA as the top holding as AVGO has more AI customers joining (OpenAI and Bytedance) and accretion from VMware. We also believe there is some investor fatigue with NVDA," Citi said. While investors may be warming up to Broadcom in a big way, its stock still has a long way to go before it catches up to Nvidia. Shares of Broadcom are up 79% in a year, compared to a 177% gain for Nvidia. Other semiconductor companies that investors were bullish on include NXP Semiconductors and Advanced Analog Devices due to expected inventory replenishments, according to the note, though Citi has a "Sell" rating on NXP Semiconductors due to downside risks in the auto industry. Finally, investors were most negative on AMD stock as fears grow that its AI-focused MI300 chips will underwhelm with lackluster sales, Citi said, adding there was negative sentiment also around chip firm Micron. "We are initiating a negative catalyst watch on MU [Micron] as we expect the stock to trade poorly over the next month as we expect Samsung to qualify HBM with NVDA in 3Q24 and raise capex," Citi said, referring to Micron's high-bandwidth memory business. Citi rates Micron stock at a "Buy" despite the negative catalyst watch. Despite the mixed sentiment on semiconductor stocks, Citi said it still has a favorable outlook on the sector as a whole.

Broadcom catching up to Nvidia in sentiment, Citi finds after latest chip survey

After speaking with investors last week, Citi weighed in on the semiconductor industry on Monday with several thoughts on the sector, including the fact that Broadcom (NASDAQ:AVGO) may be catching up to Nvidia (NASDAQ:NVDA) in terms of positive sentiment. "From our conversations, it seems that AVGO is catching up to NVDA as the top holding as AVGO has more AI customers joining (Open AI and Bytedance) and accretion from VMware," analysts at the firm wrote in an investor mote. "We also believe there is some investor fatigue with NVDA." The research firm also found that investors are positive on NXP Semiconductors (NXPI) and Analog Devices (ADI) on back of inventory replenishment. "Within the analog space, NXPI is still the most favored stock, followed by ADI due to inventory replenishment," Citi analysts said. The firm still has a Sell rating on NXP, citing the potential for "downside risks given the auto correction." NXP Semiconductors is slated to report second-quarter results after the close of trading. A consensus of analysts expect the company to earn $3.20 per share on $3.12B in revenue. Elsewhere in the analog space, Citi pointed out that some hedge funds are starting to buy Texas Instruments (NASDAQ:TXN) on the expectation of earnings upside and lower capex spending. "We believe in the revenue upside but are doubtful on the lower capex during this earnings season," Citi wrote. "We think there is a higher possibility of TXN lowering capex sometime before the end of the year." The firm also noted that mutual funds are "not keen" on Texas Instruments until they see a bottom in the company's gross margins. Citi also said that some hedge funds were buying On Semiconductor (NASDAQ:ON) on the belief of a "beat and raise" during earnings season. Citi recently downgraded to Neutral from Buy, citing risks in the silicon carbide business. Conversely, Citi said that investors were afraid that AMD (AMD) could see MI300 cuts and Microchip Technology (MCHP) could also see cuts. "We do not expect MI300 cuts but believe MCHP could guide slightly below Consensus," Citi wrote. Citi also opened a negative catalyst watch on Micron (MU), as the firm thinks the stock "could trade poorly for a month as we continue to expect Samsung to qualify HBM at Nvidia and increase capex." More on semiconductors Broadcom: I Was So Wrong On This Semiconductor AI Leader (Rating Upgrade) Broadcom Could Be The Best AI Pick Among Large Caps Nvidia: More AI Waves Are Taking Shape onsemi to supply power system solution to Volkswagen for next-gen EVs Nvidia working on new AI chip for Chinese market - report

Bullish Sentiment on Broadcom is Catching Up to Nvidia, Citi Analysts Say

Both stocks have been big winners this year, though big tech shares were hit by a range of investor concerns last week. Investors still love Nvidia (NVDA) -- but Broadcom (AVGO) is catching up in terms of bullish sentiment, according to Citi analysts who recently met with investors to gauge their views on chipmaker stocks. Citi's analysts cited new customer growth and the effects of the VMWare acquisition, completed last year, as reasons investors were enthusiastic about Broadcom's shares. Big tech companies are increasing spending to invest in AI, which could grow Broadcom's custom AI chip customer list. The analysts also said they believe there is some "investor fatigue" with Nvidia, shares of which have lately been subject to volatility amid concerns around trade restrictions and geopolitical tension. Broadcom shares were recently up about 2%, while Nvidia's added more than 4%. The chipmakers' gains on Monday helped make up for losses last week when worries about tightening trade restrictions and geopolitical tensions fueled a sell-off in chip stocks. The prospect of lower interest rates also drew some investors away from big tech shares and toward smaller companies. Overall, both Broadcom and Nvidia have been big winners this year. The former company is up more than 40%, while the latter has risen about 150%; both companies have split their shares 10-for-1 in 2024.

Citi: NVDA still the semi stock with the most positive sentiment, AVGO catching up By Investing.com

NVIDIA (NASDAQ:NVDA) continues to enjoy the most positive sentiment among semiconductor stocks, but Broadcom (NASDAQ:AVGO) is quickly gaining ground, according to Citi analysts. "While NVDA remains the stock with the most positive sentiment, we believe AVGO is catching up," Citi said in a note after a week of investor meetings in New York and Connecticut. The bank said investors are increasingly bullish on AVGO due to its expanding AI customer base, including prominent names like OpenAI and ByteDance, as well as the accretion from VMware. Additionally, analysts state there is some investor fatigue with NVDA, contributing to AVGO's rising popularity. Within the analog semiconductor sector, Citi says NXP Semiconductors (NASDAQ:NXPI) and Analog Devices (NASDAQ:ADI) are favored due to inventory replenishment. "NXPI is still the most favored stock, followed by ADI," Citi reported, though they remain sell-rated on NXPI due to potential downside risks from auto market corrections. The bank adds that Texas Instruments (NASDAQ:TXN) has also caught the attention of hedge funds, who are buying into the stock with expectations of revenue upside and lower capital expenditures. However, analysts explain that mutual funds are holding back until they see a clear bottoming of gross margins. Citi believes that TXN might lower its long-term capex by the end of the year, which could provide more transparency and potentially make the stock more attractive. On the other hand, AMD (NASDAQ:AMD) and Microchip Technology (NASDAQ:MCHP) are currently considered the least favored among investors, according to Citi. Fears of cuts to AMD's MI300 and further revenue reductions for MCHP are driving this negative sentiment. "We do not expect MI300 cuts but believe MCHP could guide slightly below Consensus," Citi stated. Citi also initiated a negative catalyst watch on Micron Technology (NASDAQ:MU), predicting poor stock performance over the next month due to anticipated developments at Samsung. "We expect Samsung to qualify HBM with NVDA in 3Q24 and raise capex," Citi explained. Despite these varied sentiments, Citi remains "wildly bullish" on the semiconductor sector as a whole.