(BFM Stock Exchange) – The semiconductor manufacturer has delivered objectives without relief for the current quarter leaving investors hungry. The title retreats after reaching historical heights.

The expression “seven magnificent” has now entered everyday language. As a reminder, this term, reference to the film The “Seven Mercenaries” (“The Magnificent Seven” in the original version) refers to Nvidia, Microsoft, Amazon, Apple, Meta, Tesla and Alphabet.

These seven titles recorded dizzying progress in 2023 and 2024, almost alone carrying the entire American market. These seven tech flibusters have seen their results and their valuations be catapulted by the development of artificial intelligence (AI), especially generative AI.

The question of enlarging this Wall Street VIP VIP club sometimes arises. The most often quoted candidate remains Broadcom, a semiconductor manufacturer in the same way as Nvidia and AMD.

Some financial intermediaries therefore sometimes consider it as the “magnificent eighth”. Others, like Deutsche Bank, refer to the acronym “Batmmaan”, the seven magnificent to which Broadcom add, and an obvious reference to the vigilante of Gotham City.

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An increase of 360% over one year

BRAODCOM has seen its action climb 85% over a year and 362% over three years. Recently the title reached its highest historic on Wednesday.

The Broadcom’s stock market success finds, like Nvidia, its roots in the Boom of AI. Quoted by Investopedia, Oppenheimer’s analysts also speak of Broadcom as “franchise number 2 of the AI ​​behind Nvidia”.

Braodcom’s XPUS processors can constitute an alternative to NVIDIA GPU (graphic processors) to give the necessary calculation power to the development of large AI (LLM) language models, such as Chatgpt or Gemini. Even if these products are not exactly the same.

The site specializes Krasia explains that NVIDIA GPUs constitute fleas for wider applications, and are therefore more versatile than Broadcom XPUS. The XPUS are integrated circuits for specific applications for customers (ASIC in English) and are therefore more cut for specific tasks. In fact, GPUs are more appropriate for LLM training, that is to say the phase where AI models are built. The Xpus are more relevant to “inference”, the stage where the LLMs are deployed on a large scale.

On LinkedIn at the start of the year, Rajansh Miglani, by Eagle Global Advisors, explained that, in essence, GPUs are more expensive than Broadcom solutions. “These are better suited to the internal workloads of large Internet/Cloud companies as well as some of their most sophisticated customers,” said the market specialist.

High expectations

In any case, Broadcom benefits at full tube from the high demand for AI. His results, published Thursday, June 5 after the closure of Wall Street, attest to this. In the second quarter of its 2024-2025 financial year, completed in early May, its revenues increased by 20% over a year to $ 15 billion, while AI-related activities only jumped from $ 46% to $ 4.4 billion. Its profit per share increased by almost 50% to 1.58 dollars against $ 1.1 a year earlier.

According to a LSEG consensus quoted by CNBC, analysts awaited revenues of $ 14.99 billion and a profit per share of $ 1.56.

However, the title Broadcom gives in the field. At the start of the session, the action lost 3% in Wall Street, this Friday, June 6. The fault is not the results per se, but to the perspectives given for the current quarter. “Broadcom has delivered income targets without relief,” writes Deutsche Bank.

For the quarter started at the beginning of May, the company said revenue $ 15.8 billion. Admittedly, consensus was housed at $ 15.7 billion. But Bloomberg reports that some projections were closer to $ 17 billion. “These prospects indicate that the expectations of investors concerning the growth of Broadcom, fueled by AI, were too ambitious,” deduces the news agency.

Bank of America, for its part, suggests that investors “ignore noise” linked to quarterly results. The American bank reiterated its recommendation to purchase and noted its target to 300 dollars (against a current course of $ 252).

“Broadcom remains in the top 5 of the sector (semiconductors, editor’s note) with a profile mixing recurring, cyclical and structural income and limited concentration risks on customers,” said the bank.