Broadcom Partners with Apple for AI Development, Stocks Rise
Shares of Broadcom (NASDAQ: AVGO) rose today following reports that the company is collaborating with Apple (NASDAQ: AAPL) on developing an artificial intelligence (AI) chip.
This collaboration marks a pivotal moment for Broadcom, strengthening its ties with Apple, the leader in consumer electronics, and could propel its growth in the AI sector, which has largely been led by Nvidia.
At 10:21 a.m. ET, Broadcom’s stock had increased by 4.9% on the news.
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Collaboration Between Two Giants
According to a report from The Information, Apple is in the process of creating its first server chip aimed at AI and is partnering with Broadcom for the necessary networking technology.
While specific details remain unclear, this partnership presents a major opportunity for Broadcom. With Apple boasting a massive base of over 2 billion devices and its recent introduction of Apple Intelligence, the company has the potential to significantly impact the AI market, although its efforts have not yet yielded groundbreaking results.
Notably, Apple is Broadcom’s largest customer, representing 20% of its revenue in both fiscal 2022 and 2023. Thus, their collaboration on AI projects comes as no surprise, especially given Broadcom’s expertise in networking chips.
Looking Ahead for Broadcom
This announcement comes right before Broadcom’s fourth-quarter earnings report, which is anticipated to show impressive growth in both revenue and earnings, partly due to its acquisition of VMware.
Analysts predict that revenue for the quarter will rise by 51.2% to $14.1 billion, with adjusted earnings per share climbing from $1.11 to $1.39.
Investor attention will undoubtedly focus on Broadcom’s expected advancements in AI, considering the new technology has taken the forefront in the chip industry. The company previously announced it anticipates AI revenue to reach $12 billion in fiscal 2024, a figure to watch closely when the earnings report is released.
Is Broadcom a Smart Investment Right Now?
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Jeremy Bowman has positions in Broadcom. The Motley Fool has positions in and recommends Apple and Nvidia. The Motley Fool recommends Broadcom. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
