Broadcom and Apple: New Cooperation in AI Sector Leads to Share Price Surge

Broadcom shares surged by 5.5 percent in morning trading after it was announced that the chip and software specialist manufacturer is collaborating with Apple to develop its first server chip specifically for artificial intelligence tasks. This news highlights the growing trend among technology giants to increasingly focus on their own chip manufacturing, while also emphasizing Broadcom's expertise in AI chip development. This could attract additional interest from competitors like Nvidia and AMD. Despite the price movement, Broadcom's shares remain susceptible to volatility, as evidenced by 21 price movements of over 5 percent in the past year. Although this recent development is perceived as significant, it does not fundamentally change the market view of the company. The most significant price increase in the last twelve months occurred six months ago, when the share rose by 15.1 percent due to positive quarterly figures. The driver was the strong demand in the AI sector, as well as the contribution from the acquisition of VMware in November 2023. Notably, Broadcom recorded AI revenues of $3.1 billion in the most recent quarter, a remarkable increase of 280 percent year-on-year, mainly driven by demand for Google TPUs and AI network revenue. Looking forward, AI revenue exceeding the $11 billion mark is expected for the fiscal year 2024, representing growth of over 150 percent. Compared to its competitors, particularly Nvidia, Broadcom also announced a 10 to 1 stock split. The company has thus presented an outstanding quarter and remains on track. Since the beginning of the year, Broadcom's share has risen by 67 percent and is trading at $181.23, close to its 52-week high of $185.95 from October 2024. Those who invested $1,000 in Broadcom five years ago could now enjoy an increase in value to $5,668. Given the growing importance of generative AI in large corporations, it is evident that this sector is gaining substantial influence.