Fund manager Stephen Yiu of Blue Whale Growth Fund predicts that Broadcom Inc. (AVGO) will yield substantial returns for investors by 2025, potentially surpassing Nvidia Corporation (NVDA).
Yiu highlighted that technology giants such as Microsoft, Amazon, Google, and Meta are diversifying their AI chip suppliers. Despite significant purchases of Nvidia's GPUs, these firms are increasingly developing custom chips for AI applications.
Yiu identifies Broadcom as a strong competitor to Nvidia, bolstered by its partnerships with major tech firms. He noted, “Nvidia's GPUs are very powerful, but at the same time also very expensive.”
As of Monday, Broadcom's year-to-date returns have surged by 103.42%, reaching a market cap exceeding $1 trillion after reporting a tripling of its AI revenue to $12.2 billion in 2024. The company collaborates with Meta, Alphabet, and ByteDance to create custom AI chips.
Yiu has reduced his investment in Nvidia from nearly 10% of his fund's portfolio, viewing Broadcom as a more appealing investment opportunity. He stated, “For a $1 trillion company to grow 50% to become $1.5 trillion is reasonable. But for Nvidia to do that, they would need to add another $1.5 trillion, which is a very big number.”
Broadcom's CEO Hock Tan expressed confidence in the sustainability of the AI boom, noting that major tech firms are heavily investing in custom processors for AI systems. OpenAI and Apple have also partnered with Broadcom for AI server chip development.
Additionally, former House Speaker Nancy Pelosi disclosed in June that she acquired call options on Broadcom, adjusted to a strike price of $80 after a 10-for-1 stock split, set to expire in June 2025.