Hock Tan, Broadcom Inc’s (NASDAQ: AVGO), chief executive officer says that the company now has two hyperscale clients for its AI custom chips.
This announcement comes after a report stating that AVGO was working on a customized chip with Apple Inc.
It’s possible that the CEO Tan mentioned AAPL as one of his new clients on the earnings conference call.
Broadcom also serves at least three “unnamed”, hyperscalers.
Broadcom’s stock rose 15% in the morning following a strong report on earnings and a series of positive comments about its AI division.
Broadcom and Apple have a long history of collaboration
Broadcom anticipates that the two AI customers will contribute to the company’s topline by the beginning of 2027.
Apple has been working with the multinational for some time now, as they already make chips and components that enable wireless connectivity on iPhones.
There have been reports about the Tech Titan wanting to create capacity in order to manufacture at least some products that would hurt AVGO’s revenues.
Hock Tan, the chief executive of Hock Group Ltd. responded to these concerns by saying “we are very committed to this customer and their multi-year roadmaps in various technologies.”
Broadcom’s stock has risen by 90% since the beginning of 2024.
ICD predicted correctly that the stock would surpass $200 after its earnings announcement.
Cramer reveals AVGO mystery customers
On the call, CEO Hock was full of praise as he talked about the AI business.
The estimate of $60-90 billion for the artificial intelligence market by 2027, which he believes to be conservative, is a reasonable one.
Jim Cramer believes that Broadcom’s three customers are Alphabet Inc., Meta Platforms and ByteDance, the owner of TikTok.
Mad Money’s host, Michael Lewis, recommends that you buy Broadcom at any dip in the future and believes it will rise to $230. This suggests another 13% potential upside.
Why does Cramer like Broadcom?
Broadcom didn’t announce the share purchase programme that was expected last night.
Cramer’s Investing Club members were informed that the company is using its capital to reduce the debt burden.
Jim Cramer has a bullish outlook on Broadcom, citing it as a semiconductor company of premium quality.
Hock Tan, who is known for his brilliant M&A strategies and ability to create value in businesses, also enjoys the confidence of Mr. Lee.
The famous investor believes that AVGO’s custom chips and networking components will be among the largest beneficiaries of AI.
Broadcom’s stock is attractive to him compared with other chip stocks, not only in terms of price-to earnings ratio but also the P/E ratio.
The shares of AI pay out a current dividend yield of 1.17 percent, which makes them even more attractive to buy at this time.
The post, Who are Broadcom’s secret hyperscale AI chips clients? This post may change as new information unfolds
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