Broadcom Inc. (NASDAQ: AVGO) is setting its sights on a massive artificial intelligence (AI) silicon market opportunity, worth over $150 billion in the next five years.
This forecast by JPMorgan analyst Harlan Sur, positions the tech giant for significant growth. Broadcom's business is poised for both near-term and long-term success, says Sur.
"The strong Y/Y booking trends that the team saw in Apr-Qtr for their non-AI semi business continues to persist into the Jul-Qtr on top of sustained AI order momentum," notes Sur. This dual strength in both AI and non-AI segments is a testament to Broadcom's strategic positioning and resilience.
Broadcom's AI Goldmine
Broadcom's AI infrastructure build-out is a key driver of its growth prospects.
The company sees a cumulative AI silicon revenue opportunity of over $150 billion across four to five major AI customers in the next five years. This implies a 30-40% annual growth rate in AI semiconductor revenues.
Sur highlights, "AI infrastructure build-out remains strong and the team sees $30B+ per AI customer of cumulative AI silicon revenue opportunity (4-5 customers) over the next 5 years."
Broadcom's AI ASIC Market Leadership
Broadcom's incumbency in the AI ASIC market, backed by strong technology capabilities and customer relationships, gives it a competitive edge.
Sur points out, "Incumbency is a big competitive advantage for Broadcom in its AI ASIC business and its strong technology capabilities/expertise/IP should drive increasing customer stickiness on higher chip complexities."
The company's expertise in Ethernet networking, powering seven of the eight largest global AI clusters, further cements its leadership in the sector.
Broad Recovery In Broadcom's Cyclical, Non-AI Segments
Beyond AI, Broadcom is witnessing a broad recovery in its cyclical semiconductor businesses.
The company's non-AI segments, including server storage and enterprise networking, are showing strong signs of improvement. "The positive booking trends that the team saw in Apr-Qtr (up 30% Y/Y in non-AI semi bookings) continues to persist into the July-Qtr.," Sur observes.
This recovery is expected to drive higher semiconductor margins and earnings.
Broadcom's $150B AI Silicon Opportunity
Broadcom's strategic initiatives and market positioning make it a formidable player in the tech landscape.
With an anticipated "$150 billion AI silicon opportunity" and a recovering semiconductor market, Broadcom is well-positioned for sustained growth.
As Sur concludes, "We see accelerating AI fundamentals combined with improving fundamentals in non-AI semiconductor business driving strong earnings revenue/earnings growth."