OpenAI and Broadcom Launch First Custom Chip
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 1 day ago
0mins
Source: CNBC
- Chip Launch: OpenAI and Broadcom have unveiled their first custom chip, named Jalapeño, marking OpenAI's entry into AI silicon, which is expected to significantly enhance the inference efficiency of its AI models.
- Market Reaction: Following the announcement, Broadcom's shares rose approximately 2%, reflecting positive market sentiment regarding its sustained demand and growth potential in the generative AI sector.
- Technological Innovation: The Jalapeño chip, referred to as an 'Intelligence Processor', aims to accelerate AI task processing, with initial deployment targeted by the end of 2026, and plans for broader applications in the future.
- Strategic Partnership: The collaboration between OpenAI and Broadcom not only addresses the increasing computational demands but also enhances OpenAI's self-reliance in AI development, reducing dependency on other suppliers.
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Analyst Views on AVGO
Wall Street analysts forecast AVGO stock price to rise
30 Analyst Rating
29 Buy
1 Hold
0 Sell
Strong Buy
Current: 382.070
Low
370.00
Averages
457.75
High
525.00
Current: 382.070
Low
370.00
Averages
457.75
High
525.00
About AVGO
Broadcom Inc. is a global technology firm that designs, develops, and supplies a range of semiconductors, enterprise software and security solutions. The Company operates through two segments: semiconductor solutions and infrastructure software. Its semiconductor solutions segment includes all of its product lines and intellectual property (IP) licensing. It provides a variety of radio frequency semiconductor devices, wireless connectivity solutions, custom touch controllers, and inductive charging solutions for mobile applications. Its infrastructure software segment includes its private and hybrid cloud, application development and delivery, software-defined edge, application networking and security, mainframe, distributed and cybersecurity solutions, and its FC SAN business. It provides a portfolio of software solutions that enable customers to plan, develop, automate, manage and secure applications across mainframe, distributed, mobile and cloud platforms.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Performance Enhancement: The Jalapeño chip focuses on reducing data movement and latency, with early tests suggesting its performance per watt will significantly surpass that of current cutting-edge processors, potentially accelerating the execution of next-generation AI inference tasks.
- Market Outlook: Broadcom's CEO indicated that AI chip revenue is expected to exceed $100 billion by 2027, compared to the company's total revenue of approximately $64 billion in 2025, highlighting the substantial growth potential ahead.
- Investment Appeal: Despite Broadcom's stock trading at 19 times next year's expected earnings, this valuation remains attractive given the company's leadership in the AI sector and strong market trends, indicating significant future investment value.
See More
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- Investor Focus: Although the market has already priced in expectations for future growth, Broadcom's AI business is still considered one of the most compelling stock stories to watch, reflecting investor confidence in its long-term value.
- Stock Performance: As of June 13, 2026, Broadcom's stock price has risen, showcasing the market's positive response to its investments in AI infrastructure, further solidifying its leadership position in the tech sector.
- Strategic Importance: Broadcom's next phase will focus on meeting the compute capacity needs of AI labs, which will not only enhance its competitive edge in the market but also potentially yield substantial long-term returns for the company.
See More
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- Micron's Strong Performance: Micron reported better-than-expected earnings, leading to a stock price increase of over 13%, which not only enhances its competitive position in the memory and storage sector but also positively impacts peers like Sandisk and Western Digital.
- Apple's Stock Decline: Apple raised prices on several MacBook and iPad models due to rising memory costs, resulting in a nearly 5% drop in its stock price, raising concerns about potential demand destruction and negatively affecting overall tech stock performance.
- Intel's Neutral Rating: Goldman Sachs initiated coverage on Intel with a neutral rating and a $150 price target, implying about 14% upside, although Intel has outperformed competitors like Nvidia and AMD among large-cap chipmakers in recent weeks.
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- Qualcomm's Revenue Target Boost: Qualcomm raised its fiscal 2029 non-handset revenue target to $40 billion during its investor day, nearly doubling its previous target, with its new data center AI infrastructure strategy projected to contribute over $15 billion in revenue, indicating robust growth potential in emerging markets.
- Major Banks Pass Stress Tests: All major banks passed the Federal Reserve's annual stress tests, allowing them to return more capital to shareholders, with JPMorgan increasing its quarterly dividend to $1.65 and approving a $50 billion buyback program, reflecting their strong financial health.
- Darden's Slight Earnings Beat: Darden Restaurants reported fiscal Q4 EPS of $3.66, beating expectations by 3 cents, with total comparable store sales up 4.6% versus the expected 4.1%, although a slightly weak EPS guidance for fiscal 2027 led to a 3% drop in stock price this morning.
See More
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- AI Stock Performance: Over the past few years, technology stocks focused on artificial intelligence, particularly Nvidia and Alphabet, have led market gains, with their stock prices climbing triple digits in three years, highlighting the potential impact of AI on company efficiency and profitability.
- Valuation Concerns: Despite ongoing revenue growth from AI companies, investor worries about high valuations and spending levels have significantly depressed the valuations of many AI stocks, especially those within the so-called 'Magnificent Seven'.
- Market Volatility: Recently, tech stocks have faced renewed pressure, partly due to investors locking in profits or selling older positions to free up cash for upcoming tech IPOs, such as SpaceX's record IPO, which has further influenced market sentiment.
- Historical Lessons: Historical data shows that while the Nasdaq index experiences fluctuations, it typically rebounds quickly after declines, suggesting that now is an opportune time to buy quality tech stocks, with investors potentially reaping significant long-term gains.
See More
Volatility in Tech Stocks and Investment Opportunities
- Tech Stock Recovery: Despite volatility this year, tech companies focused on AI continue to show strong revenue growth, with stocks like Nvidia and Alphabet rising triple digits over the past three years, indicating sustained market confidence in AI's potential.
- Valuation Concerns: Investor worries about high valuations and spending on AI have led to declines in many AI stocks, particularly the 'Magnificent Seven' tech stocks, including Nvidia and Alphabet, which are now trading below last year's levels, reflecting caution about future earnings.
- Market Sentiment Fluctuations: Recently, tech stocks have faced renewed pressure as some investors lock in profits or sell older positions to free up cash for new tech IPOs, such as SpaceX's record IPO, highlighting a shift in focus towards new opportunities in the market.
- Historical Investment Strategy: Historical data shows that while the Nasdaq has experienced declines, buying during downturns often leads to substantial long-term gains, making the current environment a favorable time to invest in quality tech stocks, especially when market sentiment is low.
See More
