Nvidia Stock Gains. Broadcom Thinks It Can Compete With the AI Chip Giant in This Area.
Updated June 13, 2024 4:18 pm EDT / Original June 13, 2024 5:51 am EDT
Nvidia shares rose on Thursday. Fellow chip company Broadcom underlined demand for artificial-intelligence processors in its earnings but also its intention to fight for market share in AI networking technology.
3.52%
shares were up 3.5% at $129.61. The stock closed with a gain of 3.6% on Wednesday.12.27%
reported strong AI chip demand in its earnings report on Wednesday. Broadcom is the leading player in the high-end AI ASIC—application specific integrated circuits—market, and helps large companies, such as Alphabet’s Google unit, design custom chips. Broadcom rose 12%.Broadcom executives were keen to emphasize that their chips aren’t directly competing with Nvidia’s graphics-processing units.
“We take the approach that we don’t do those GPUs. But we enable the GPUs to work very well. So…we supplement and hopefully complement those GPUs with customers who are building bigger and bigger GPU clusters,” Broadcom CEO Hock Tan told analysts on an earnings call.
However, Broadcom was marginally more combative when it came to holding its ground against Nvidia’s Spectrum-X Ethernet product, which Nvidia launched recently as a complement to its InfiniBand networking technology. Ethernet networking is one of Broadcom’s traditional strengths.
Broadcom said seven of the eight largest existing clusters of AI chips are deployed with Ethernet networking infrastructure powered by the company’s technology and it expects all megascale AI clusters will be powered by Ethernet next year.
“We’ve been doing Ethernet for over 25 years…And we’ve gone through a lot of market transitions and we have captured a lot of market transitions from cloud-scale networking to routing and now AI. So, it’s a natural extension for us to go into AI,” Tan said.
Nvidia has said it expects Spectrum-X to be a multibillion-dollar revenue generator within a year. Broadcom’s networking revenue in its latest quarter was $3.8 billion, up 44% from a year earlier.
Among other chip makers, Advanced Micro Devices
-0.21%
was down 0.2% in while Intel INTC
-0.98%
was down 1%.Nvidia shares have risen 162% this year. That compares with a 14% increase in the S&P 500
0.23%
and 18% jump in the Nasdaq Composite over the same period.Write to Adam Clark at adam.clark@barrons.com