Why AI Giants Are Turning to $AVGO Over $NVDA

AfraSimon
07-11 10:42

Why are $Alphabet(GOOGL)$ $Meta Platforms, Inc.(META)$ OpenAI, Anthropic,

and now $Apple(AAPL)$ paying $Broadcom(AVGO)$ hundreds of billions for AI chips instead of simply buying them from $NVIDIA(NVDA)$ ?

Well, Broadcom's custom AI ASICS are built for SPECIFIC AI tasks.

Broadcom's ASICs can run those workloads more efficiently than general-purpose NVIDIA GPUs.

They deliver higher performance per watt, which reduces power consumption and operating costs for large data centers.

The custom design is optimized for customers' AI infrastructure, allowing faster and more efficient processing at huge scale.

The tradeoff is that they are less flexible than NVIDIA GPUs, which can handle a much wider variety of AI models and workloads.

But this trade-off is worth the potential of tens of billions in savings if chips are used as designed.

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