Broadcom, a once-obscure chipmaker based in Palo Alto, California, has recently experienced a surge in market value that has brought it close to Warren Buffett’s Berkshire Hathaway conglomerate. With a market capitalization of $839 billion as of Tuesday’s close, Broadcom is now just behind Berkshire’s $882 billion and Eli Lilly’s $845 billion. This growth has been primarily driven by a strong earnings report and a rally that saw its shares increase by more than 35% in June alone. This surge has placed Broadcom among the top players in the market, inching closer to the trillion-dollar club.
Partnerships and AI Applications
Broadcom’s success can be attributed to its partnerships with major tech companies such as Apple and Google. The company supplies semiconductor devices that are capable of running advanced AI applications, a technology that has captured the interest of investors in recent years. Google, in particular, has been utilizing Broadcom’s chips for its AI chip called a TPU, showcasing the company’s relevance in the AI space. This partnership has allowed Broadcom to tap into the growing demand for high-capacity chips that power complex AI applications, resulting in $3.1 billion in sales attributed to AI products in the current quarter.
Berkshire’s Position
On the other hand, while Berkshire Hathaway has a solid track record as an old-economy conglomerate with investments in various sectors such as insurance and transportation, its market value has lagged behind Broadcom’s recent surge. Although Berkshire is currently at number 7 in market value, there is speculation that it could potentially join the trillion-dollar club in the future. However, this may take longer to materialize in the current tech-dominated bull market, where companies with strong AI exposure like Broadcom are leading the pack.
Broadcom’s record-setting rally and its close proximity to Berkshire Hathaway in terms of market capitalization underscore the company’s strong performance and strategic partnerships in the tech sector. As the demand for AI accelerators and high-capacity chips continues to rise, Broadcom is well-positioned to capitalize on this trend and maintain its growth trajectory in the market.