Fahad Saleem
2 min read
In This Article:
Doug Clinton, Deepwater Asset Management co-founder and managing partner, said in a latest program on CNBC that the demand for AI services and applications is rising. Asked who the key beneficiaries of this trend are, the analyst said semiconductor companies continue to see the immediate positive impact of AI spending:
“The semis are going to keep seeing this more immediate spend.”
According to CNBC, Broadcom Inc. (NASDAQ:AVGO) is one of Deepwater’s top holdings.
What's Broadcom’s moat and how can the stock gain an upward momentum? It makes ASIC, chips designed for specific applications and tasks. As major companies look for custom chips to break Nvidia monopoly and lower costs, Broadcom is positioned well to thrive. Many top AI spenders are teaming up with Broadcom to develop these chips, which are expected to be high-margin, high-volume products, potentially driving substantial growth in both revenue and profits.
Photo by Dimitris Chapsoulas on Unsplash
Sands Capital Select Growth Strategy stated the following regarding Broadcom Inc. (NASDAQ:AVGO) in its Q1 2025 investor letter:
“Broadcom Inc. (NASDAQ:AVGO) is a key enabler of systems scalability and compute growth via ethernet networking and custom accelerators. We believe Broadcom will benefit from advancements in AI models in conjunction with increases in computing power, also known as scaling laws. Broadcom supports advances in computing power by providing high bandwidth, low-latency networking solutions. Its solutions help relieve bottlenecks in scaling computing power as an increasing number of semiconductor chips work in parallel for AI training and inference. We expect Broadcom’s ethernet switches used for networking to be the primary driver of incremental growth as it benefits from both share increases and demand for larger server clusters that will require better networking solutions. Complementing its networking business, Broadcom is the largest provider of custom chip design services by revenue. These services enable businesses to take greater control of their technology stack, reduce reliance on third-party suppliers, and optimize costs and energy efficiency.”
