Broadcom Is 'Very, Very Capable,' Analyst Says As NVIDIA's Troubles Mount

Broadcom Inc. (NASDAQ:AVGO) is poised to benefit from the leadership turmoil at NVIDIA Corp. (NASDAQ:NVDA), according to analysts. As NVIDIA faces increasing competition and navigates internal challenges, experts believe the chipmaker's rival is gaining ground in the AI race. Jay Goldberg, a Seaport Research analyst, described Broadcom as "very, very capable" in helping major cloud companies develop custom AI chips.

He believes the company has already gained market share before NVIDIA's leadership issues, and this trend could accelerate as customers seek alternative processors.

Will McGough, Chief Investment Officer at Prime Capital Financial, echoed a similar sentiment, stating that Broadcom could capitalize on the weakening dominance of NVIDIA. McGough mentioned that Advanced Micro Devices (AMD) is also gaining market share, and Broadcom could step in to fill the gap during NVIDIA's leadership transition.

He pointed out that Alphabet Inc., Amazon.com Inc., and Chinese companies are developing custom chips, which could weaken NVIDIA's software advantage and make competing processors more attractive.

Analysts covering Broadcom maintain a consensus Buy rating, with an average price forecast of $522.92. This optimism is supported by Broadcom's upcoming earnings report on December 9, where analysts expect earnings of $3.81 per share, a significant increase from $1.95 a year earlier. Revenue is also forecasted to reach $34.89 billion, compared to $18.02 billion last year.

Despite a current decline of 1.40% at $359.25 in premarket trading, Broadcom's strong position in the AI chip market seems secure as major cloud companies diversify their chip suppliers and invest in custom processors.