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Keithen Drury, The Motley Fool
Mon, May 11, 2026 astatine 5:05 AM CDT 3 min read
Few companies volition spell done arsenic overmuch of a translation arsenic Broadcom (NASDAQ: AVGO) volition implicit the adjacent year. Currently, it's a ample tech institution with countless products nether its roof, but 1 is astir to go acold much important than immoderate different offering: customized AI chips. Broadcom (and the market) are incredibly bullish connected this capability, and the institution could go a $100 cardinal concern adjacent year.
Considering that Broadcom's gross implicit the past 12 months was $68 cardinal and customized AI chips were lone a fraction of that total, everything is astir to alteration for Broadcom, and present is the cleanable clip to buy.
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Custom AI chips are rising successful popularity
Nvidia (NASDAQ: NVDA) presently dominates the AI computing market. Its GPUs are good known to beryllium the champion general-purpose chips available, and there's not overmuch that volition alteration that successful the future. However, GPUs are costly and not inexpensive to run. This stems from the information that they are designed to tally a wide assortment of workloads. However, that capableness is wasted if the GPU sees 1 benignant of workload passim its work life.
Instead, companies are starting to spouse with Broadcom to plan an application-specific integrated circuit (ASIC) tailored to tally a azygous benignant of workload. This provides acold greater cost-effectiveness than GPU-based grooming and inference, though immoderate trade-offs are required to execute these results.
The astir celebrated illustration of a Broadcom merchandise is Google's Tensor Processing Unit (TPU). Broadcom and Google person agelong partnered to plan and physique these units, and the occurrence of the TPU has caused respective different AI hyperscalers to spouse with Broadcom to make their ain customized chip. These instrumentality a portion to plan and hole for manufacturing, but determination is simply a monolithic question of clients whose customized chips volition go disposable aboriginal this twelvemonth and passim 2027, which is driving the monolithic increase.
During Q1, the part that customized AI chips are accounted for delivered 106% year-over-year maturation to $8.4 billion, but determination are besides different products included successful that total. So, it's beauteous harmless to accidental that existent yearly income of customized AI chips are apt beneath $30 billion. However, by the extremity of adjacent year, absorption believes that fig could beryllium supra $100 billion. That's explosive growth, and if that pans out, Broadcom could person unthinkable returns. As a result, I deliberation it's a apical AI banal to bargain today.
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