Broadcom, Ltd. (AVGO) stands to gain significantly from OpenAI’s shift toward diversifying AI chip suppliers, particularly following OpenAI’s recent partnership with Advanced Micro Devices (AMD). This move, which includes a substantial deal for AI chips and a 10% stake in AMD, highlights AVGO’s potential role in OpenAI’s future chip supply needs. Currently, AVGO stock remains stable at around $339, while AMD has seen a 27% increase. Analysts suggest that, if AVGO secures a deal similar to AMD’s, it could lead to substantial revenue growth, pushing the stock price potentially to $427.78, a 26.5% increase from current levels. With broad market estimates indicating a rise in free cash flow and revenue forecasts, AVGO presents a compelling investment opportunity. Utilizing strategies such as shorting out-of-the-money puts and purchasing long-dated in-the-money calls could yield substantial returns over the next six months. Overall, AVGO is positioned for potential growth amid a dynamic AI market.
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