Broadcom’s AI Chip Dominance Accelerates with OpenAI Partnership
Broadcom's stock surged nearly 10% following its $10 billion AI chip collaboration announcement with OpenAI on October 13. The semiconductor giant reported Q3 FY25 revenue of $15.95 billion, a 22% year-over-year increase, with AI-specific revenue skyrocketing 63% to $5.2 billion.
The company's strategic pivot toward custom AI accelerators appears prescient. Its newly unveiled 800G Ethernet networking chip, Thor Ultra, targets the booming AI data center market. With a $27.5 billion backlog and projected FY25 AI revenue approaching $20 billion, Broadcom demonstrates how traditional semiconductor players can capitalize on the AI infrastructure boom.
Wall Street remains bullish, maintaining Strong Buy ratings with price targets reaching $460 - representing 35% upside potential. At 80x forward P/E, the valuation reflects sky-high expectations for continued AI-driven growth.
