AI-chip giant Broadcom conquers the future: Jefferies sees potential for 2025

The renowned investment bank Jefferies has named Broadcom as its favorite for the year 2025. The company is in an excellent position in the rapidly growing market for AI chips, driven by the demand for custom-designed chips, known as ASICs. Due to this strong market position, Jefferies raised the price target for Broadcom from 225 to 300 US dollars – an investment in robust profit growth. Broadcom's advanced chip technology presents serious competition to Nvidia's offerings, particularly in the area of computing density. With new technologies such as 3.5D packaging and silicon photonics, the company is gaining significance. Broadcom plays a key role in building powerful AI clusters, with major customers aiming to deploy one million computing units. These clusters support general artificial intelligence, a central area of innovation. Jefferies estimates that Broadcom's sales of AI chips could bring in over 60 billion US dollars by 2027, potentially driving earnings per share to 12 dollars or more. Even if Broadcom captures only a fraction of the high-value market, Jefferies sees significant upside potential. Particularly in the area of training-focused chips, which command higher prices due to their more complex designs, Broadcom's AI business is gaining momentum. These chips are expected to become larger and incorporate more advanced technologies, increasing average selling prices. Additionally, Jefferies foresees positive developments for Broadcom's networking and optical products.