ChatGPT parent OpenAI is one of the world’s most valuable unicorns. As a result, it holds considerable sway in the AI space. Just ask the semiconductor industry. It’s benefited from recent OpenAI announcements.
Add Broadcom (AVGO) to that list. It’s arguably sleepy. That’s because it’s the second-largest U.S.-based semiconductor maker behind only Nvidia (NVDA). When factoring in its status as a $1 trillion-plus company with a deep AI footprint, Broadcom surged into the AI spotlight on Monday on news of a deal with OpenAI. Those headlines delivered big benefits for traders engaged with the Direxion Daily AVGO Bull 2X (AVL).
Broadcom and OpenAI inked an accord under which they’ll partner on 10 gigawatts of custom AI accelerators. Specific financial terms weren’t disclosed. But some reports suggest it’s valued in multiple billions of dollars. Judging by the performances of Broadcom and AVL, market participants expect the deal to be meaningful to the semiconductor firm. Deployment of the systems may commence in the second half of next year and run through 2029.
“OpenAI and Broadcom have long-standing agreements on the co-development and supply of the AI accelerators. The two companies have signed a term sheet to deploy racks incorporating the AI accelerators and Broadcom networking solutions,” according to a press release.
OpenAI Deal Could Make AVL Awesome
The OpenAI deal could benefit Broadcom shares and AVL going forward for multiple reasons. One reason: It serves as a reminder that Broadcom isn’t being left behind in the AI conversation. That’s worth taking into account. That’s particularly so following recent news of OpenAI notching deals with Nvidia and AMD.
The good news for investors considering Broadcom shares or a short-term dance with AVL is that the OpenAI accord cements the notion that the chip giant remains an AI leader, not an afterthought.
“Broadcom’s collaboration with OpenAI signifies a pivotal moment in the pursuit of artificial general intelligence,” said Hock Tan, president and CEO of Broadcom, in the statement. “OpenAI has been in the forefront of the AI revolution since the ChatGPT [moment. We] are thrilled to co-develop and deploy 10 gigawatts of next- generation accelerators and network systems to pave the way for the future of AI.”
Perhaps adding to the intrigue surrounding Broadcom and AVL is that company executives noted Monday OpenAI is not the $10 billion mystery customer noted in the semiconductor maker’s latest earnings update. That could be a sign more opportunities to trade AVL await.
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