Broadcom Inc. (NASDAQ:AVGO) is riding the artificial intelligence boom as soaring Big Tech investments in data infrastructure fuel demand for its custom chips and networking solutions, propelling the stock to strong year-to-date gains even as the company faces regulatory challenges in Europe.
The custom chipmaker has surged 25% year-to-date, outpacing the NASDAQ Composite’s 9% gain, as booming demand for its networking and Application-Specific Integrated Circuit (ASIC) businesses positions the chipmaker at the center of the AI-driven rally.
More than $400 billion in planned AI infrastructure spending through 2026 from Microsoft (NASDAQ:MSFT), Meta Platforms (NASDAQ:META), Alphabet (NASDAQ:GOOGL) (NASDAQ:GOOG), and Apple (NASDAQ:AAPL) has created an unprecedented growth runway for suppliers like Broadcom.
That momentum has been further supported by the Trump administration’s AI Action Plan and updated China trade policy, which reinforced U.S. leadership in semiconductors while opening new markets for chipmakers.
Broadcom is seizing the opportunity with new products tailored for hyperscale AI workloads. Its recently launched Jericho4 ethernet fabric router, built on a 3nm process, delivers high-bandwidth, secure, lossless connectivity across data centers up to 100 kilometers apart.
The platform interconnects more than one million XPUs and complements Broadcom’s Tomahawk 6 and Tomahawk Ultra chips, targeting hyperscalers like Microsoft and Amazon.com (NASDAQ:AMZN). The company also plans to spotlight its AI and private cloud capabilities at VMware Explore 2025.
Analysts see Broadcom as well-positioned to capture a meaningful slice of the accelerator market through ASIC adoption, even as Nvidia (NASDAQ:NVDA) maintains a dominant share of the GPU segment.
Bank of America Securities projects Broadcom could secure 10%–15% of the market long term, driven by rising AI compute and networking demand.
But growth comes with challenges. EU judges are reviewing a CISPE lawsuit contesting the European Commission’s approval of Broadcom’s $61 billion VMware acquisition, alleging regulators overlooked competitive risks.
Since closing the deal, Broadcom has raised VMware prices and tightened licensing, drawing pushback from European cloud providers.
The legal battle threatens to complicate Broadcom’s expansion in the region, even as VMware revenue bolsters its AI-driven growth story.
Price Action: AVGO stock is trading higher by 0.73% to $291.72 premarket at last check Friday.
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