“There is no change in our engagement,” Google said.
“We work well with Broadcom and many other providers,” a Google spokesperson said. Baron In a statement sent by email. “They benefit from our partnership with Broadcom to meet our business’ internal and external cloud needs; they have been a great partner and we see no change in our involvement.”
Broadcom did not respond to requests for comment. Baron.
Shares of Broadcom (ticker: AVGO ) fell 1.3 percent, paring earlier losses, after executives reported
Alphabet
S
( GOOGL ) Google has widely discussed ousting Broadcom as a supplier of AI chips in 2027, when Google will design its chips—tensor processing units—in-house. According to the report From the information mentioned by someone familiar with the matter.
The move could help the search leader save billions of dollars a year by investing in AI, with Google executives aiming to leave Broadcom earlier this year because of the cost of TPU chips, the report said.
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Google is working to replace Broadcom’s advanced chip project with another chipmaker starting in 2022.
Marvel technology
(MRVL), the report added. Marvel stock fell 1%.
After the chip maker
Nivea
( NVDA ), the darling of Wall Street, has pushed tech stocks higher in 2023 amid AI investment frenzy, with analysts citing Broadcom as a key beneficiary of investment in the high-growth space. Broadcom CEO Hock Tan indicated on a recent earnings call that AI-related sales could account for 25 percent of chip revenue by 2024.
For Mizuho analyst Jordan Klein, the prospect of increased competition in chip design — including from companies bringing capabilities in-house — is “another reason I’m continuing to love proprietary technology” amid the AI frenzy.
Synopses
And
Cadence design systems
,
Clear winners and arms dealers in the AI game.
Alphabet or others that design and build their own custom AI chips must use specialized design and testing software, Klein wrote in a note. These are known as electronic design automation, or EDA, tools
Synopses
(SNPS) and
Cadence
(CDNS) are a leading provider of ADA software.
“Synopses and Cadence are EDA software providers that are poised to see an increase in global demand when these top customers purchase these three-year subscriptions,” added Klein. They are extremely high margin businesses with incredible visibility into revenue and profits. On a weakness in technology sales, you’ll want to add these two and hold them for the long haul.
Wall Street seems to broadly agree, with both stocks earning an average buy rating among analysts surveyed by FactSet. Shares of both companies have increased this year—but not as much as other AI-focused names. Nvidia stock is up 189% in 2023, while Synopsis and Kaden have gained 42% and 46%, respectively.
Write to Jack Denton at [email protected]
