AI chip competition: NVDA vs. AVGO

What happened: In the AI chip competition, Nvidia (NVDA) and Broadcom (AVGO) are the key players. Broadcom recently unveiled OpenAI's first custom AI chip, Jalapeño, with expectations of $100 billion in AI chip revenue by fiscal 2027. Meanwhile, Nvidia's data center revenue topped $75 billion in a single quarter. Netlist (NLST) is challenging Samsung, Google, Nvidia, and Broadcom in AI memory. JPMorgan advised aggressive buying of Broadcom after its record $22 billion revenue and 143% surge in AI semiconductor revenue. However, the USD's 17% decline on June 5 amplified a chip sector selloff, with Broadcom and Nvidia both dropping significantly.

Market impact: The AI chip market is booming, with both Nvidia and Broadcom benefiting from increased demand. However, the custom ASIC market is projected to grow faster than the AI accelerator market, giving Broadcom an edge. The recent selloff in chip stocks has led to valuation repricing, with Broadcom's stock becoming more attractive despite its higher price. The fight for AI memory market share between Netlist and industry giants could disrupt the supply chain and drive innovation.

What to watch next: Investors should closely monitor Broadcom's earnings, expected in late August, to gauge the momentum of its AI chip business. Additionally, the outcome of Netlist's legal battles against tech giants will provide insight into the competitive landscape of AI memory. Lastly, the evolution of the USD's strength will continue to influence the broader chip sector, with potential impacts on both Nvidia and Broadcom.