Broadcom, a big player in the world of computer chips, is facing a significant drop in its stock value. This decline is due to worries about its long-standing partnership with Google, where they provide chips for artificial intelligence (AI) applications. Recent reports suggest that Google is thinking about making its own AI chips, which could mean trouble for Broadcom’s role as a chip supplier.
Broadcom’s stock, which is traded under the symbol AVGO, saw a nearly 6% decrease in value during early morning trading on Thursday. This drop is in response to reports that Google, which is part of Alphabet and is traded as GOOGL, has been talking about ending its reliance on Broadcom for AI chips as soon as 2027. According to information from insiders, Google is exploring the idea of designing its own tensor processing units (TPU), the chips used for AI tasks.
This move by Google could save the company a lot of money, possibly billions of dollars each year, especially since Google has invested heavily in AI technology. The report reveals that Google’s decision to consider making its own chips follows months of negotiations with Broadcom over the price of TPU chips.
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It’s worth noting that since 2022, Google has been looking for alternatives to Broadcom for an advanced chip project. They are also considering partnering with another chip manufacturer, Marvell Technology, traded as MRVL. Marvell’s stock showed a 4% increase in value during early morning trading, indicating that the market is reacting positively to this development.
Broadcom had recently become a major player in the AI industry, and analysts saw the company benefiting from the strong trend of investment in AI technology that has been boosting tech stocks in 2023. During a recent earnings call, Broadcom’s CEO, Hock Tan, mentioned that AI-related sales could potentially make up to 25% of the company’s chip revenue by 2024.
As of now, neither Broadcom nor Alphabet (Google’s parent company) has made an official statement about these developments. The situation is still evolving, and investors and industry experts are closely watching to see what Google decides about its AI chip supply chain.
Disclaimer: The information provided in this article is for informational purposes only and does not constitute financial advice. Always conduct your own research before making any investment decisions in the crypto space.
