On December 20, 2024, global semiconductor leader Broadcom (AVGO.US) achieved a significant milestone as its stock soared by 24%, pushing its market capitalization above $1 trillion for the first time. Since 2023, Broadcom has emerged as a key player in the AI investment boom, with analysts speculating it could become the first major challenger to NVIDIA’s (NVDA.US) dominance in the AI sector.
ARK “Wealth Management Opportunities”, a flagship column from Ark Wealth, an international brand under Noah Holdings (HKEX: 6686, NYSE: NOAH), continues to decode key industry developments and provide insights into wealth management prospects in the AI-driven era.
“AI Investment Boom Expected to Extend Through 2030”
In mid-December, Broadcom’s earnings report revealed a staggering 220% year-on-year increase in AI-related revenues, totaling $12.2 billion. CEO Hock Tan predicted that major technology companies will continue their AI investment surge through the end of the decade.
This edition of ARK “Wealth Management Opportunities” explores public data to analyze the factors driving Broadcom’s recent stock surge.
Broadcom’s Stock Performance Over the Past Month
(Source: Yahoo Finance | Chart by ARK)
Benefiting from the rapid rise of generative AI, Broadcom is poised to become a leader in the ASIC (Application-Specific Integrated Circuit) sector. Its robust growth is fueled by advanced AI chip technologies and a forward-thinking strategic approach. Broadcom has established deep collaborations with tech giants like Google and Meta, producing custom AI chips that have already entered mass production. Unlike general-purpose processors, Broadcom’s AI ASIC chips are purpose-built for tasks such as deep learning and AI inference. These chips excel in computational efficiency and energy savings. For instance, Broadcom’s TPU (Tensor Processing Unit), co-developed with Google, has set a new benchmark in AI computing.
Broadcom has capitalized on the rapid expansion of generative AI, and its deep expertise and strategic foresight in the AI chip market have been key drivers of its strong growth trajectory.
Beyond its booming AI segment, Broadcom’s acquisition of VMware is expected to fuel additional growth. By transitioning VMware’s licensing model from perpetual licenses to subscription-based SaaS services, Broadcom aims to unlock greater value from its software division.
Leading Asset Managers Increase AI Investments
While tech giants continue to double down on AI, top global asset management firms are also signaling strong confidence in the sector with strategic investments.
Long-Term Confidence in AI’s Growth Potential
Top institutions are consistently increasing their stakes in AI, underscoring its enduring appeal as an investment theme. For example, BlackRock’s portfolio heavily features AI-centric companies such as Microsoft (5.61%), NVIDIA (5.15%), and Broadcom (1.24%).
BlackRock’s Portfolio Allocation
(As of June 30, 2024)
(Source: Yahoo Finance | Chart by ARK)
Similarly, Vanguard Group has increased its holdings in Broadcom to approximately 469 million shares, valued at over $100 billion, representing a 4.541% increase from the prior reporting period.
Broadcom’s Institutional Holdings
(As of September 30, 2024)
(Source: Yahoo Finance)
From technological breakthroughs to commercialization, and from supply chain optimization to ecosystem development, the AI sector is undergoing a sustained evolution. The growing stakes by top asset managers reflect their confidence in AI’s long-term value.
ARK’s Commitment to Empowering Global Chinese Investors in Capturing AI Opportunities
Investing in AI, a rapidly advancing field, presents both opportunities and challenges. Success requires a long-term perspective, deep understanding of the industry value chain, and strong global expertise coupled with effective risk management. In this highly innovative space, professional investment institutions play an increasingly crucial role.
ARK remains dedicated to helping clients navigate markets with positive beta potential, enabling global investors to harness the transformative opportunities presented by the AI revolution.
With its expanding international presence, cutting-edge research capabilities, innovative product offerings, and global service network, ARK is committed to empowering global Chinese investors to seize AI-driven investment opportunities while fostering long-term wealth growth.
