OpenAI and Broadcom recently forged a groundbreaking partnership to co-develop custom AI chips worth approximately $10 billion for data centers. This collaboration enables Broadcom to compete robustly in the customized AI infrastructure market as it launches advanced hardware solutions like the Thor Ultra 800G AI Ethernet NIC and Wi-Fi 8 silicon. This partnership underscores Broadcom’s pivotal role in meeting the growing demand for custom AI chips, particularly among hyperscalers and generative AI companies. However, heavy reliance on a few key clients introduces customer concentration risk, particularly if orders fluctuate. As a result, Broadcom anticipates a significant revenue rise to $119.6 billion by 2028 with an earnings jump to $50.8 billion. Investor sentiment remains mixed, reflected in fair value estimates ranging from $241.80 to $392.38. Broadcom’s growing portfolio positions it as a crucial player in next-gen AI infrastructure, leading to potential growth, but caution is advised regarding market dependencies.
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