Stephen Yiu, portfolio manager of the Blue Whale Growth Fund, predicts Broadcom (AVGO, Financial) will thrive in 2025 as the next ‘Nvidia'. As Big Tech cuts dependency on a single supplier for artificial intelligence chips, Broadcom stands to gain immensely.Yiu pointed out that although firms like Microsoft (MSFT, Financial), Amazon (AMZN, Financial), Google (GOOG, Financial), and Meta Platforms (META, Financial) have invested heavily in Nvidia's (NVDA) graphics processing units, they are now creating proprietary AI chips to diversify vendors.
"Broadcom is not Nvidia, but we would expect Broadcom to be the next Nvidia in terms of outperformance potential," Yiu said during Wednesday's Pro Talks on CNBC, stressing Broadcom's close relationship with big tech businesses.Driven by Broadcom's AI revenue growth of over 200% to $12.2 billion in 2024, its shares have surged upwards of 126% year-to-date and its market capitalization passed $1 trillion.
Under the direction of CEO Hock Tan, the company is developing bespoke artificial intelligence processors for three main cloud computing customers—identified by analysts as Meta, Alphabet, and ByteDance. By 2027 each is planned to have one million AI chips in clusters.Still among the top 10 holdings of the Blue Whale Growth Fund, Broadcom shows hope for future expansion in the evolving artificial intelligence scene.
