Wall Street is closely monitoring the demand for ASIC (Application-Specific Integrated Circuit) chips by major tech companies, which could be impacting NVIDIA's (NVDA) stock performance. Custom chips are expected to capture market share from expensive GPUs in generative AI applications over the coming years. Broadcom's (AVGO, Financial) optimistic AI forecast for the next three years has sparked significant market reactions, with its stock surging over 24% in a single day. Meanwhile, NVIDIA's stock fell by 2.3%, and AMD's by 2.8%, making them the biggest laggards in the PHLX Semiconductor Index.
Broadcom's projections suggest a potential market of $60-90 billion by fiscal 2027, driven by its large-scale customer base. Investors are questioning whether companies like Meta and Alphabet will pivot towards ASICs, leading some to sell NVIDIA shares in favor of Broadcom. This shift reflects growing confidence in Broadcom's future growth potential.
