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Broadcom's stock price has reached an all-time high, announcing 'breakthrough' data center Switch chip before the Earnings Reports.

wallstreetcn ·  Jun 4 08:55

Broadcom announced on Tuesday that it has begun shipping its latest data center Switch chip, Tomahawk 6, claiming that its Ethernet switching capacity is double the bandwidth of any Ethernet Switch currently on the market. This chip is specifically designed for the demands of data centers running AI processor clusters. Following the news, Broadcom's stock price rose nearly 3.3%, with its Market Cap approaching $1.2 trillion for the first time.

$Broadcom (AVGO.US)$ On the eve of the Earnings Reports, a "breakthrough" data center Switch chip was suddenly released, with stock prices reaching an all-time high.

On June 3, while everyone was waiting for Broadcom's Earnings Reports, the chip giant announced it had begun shipping its latest data center Switch chip Tomahawk 6, claiming its Ethernet switching capacity reaches 102.4 terabits per second, double the bandwidth of any Ethernet Switch on the market. This chip is designed specifically for the needs of data centers running AI processor clusters.

Ram Velaga, Senior Vice President and General Manager of Broadcom's core switching business, emphasized in a press release:

Tomahawk 6 is not just an upgrade—it is a breakthrough. It marks a turning point in AI infrastructure design, combining maximum bandwidth, power efficiency, and adaptive routing capabilities into a single platform.

According to media reports, this chip uses$Taiwan Semiconductor (TSM.US)$The 3-nanometer process manufacturing, compared to the previous generation Tomahawk 5's 5-nanometer process, achieves a process upgrade. Broadcom emphasizes that the direct benefit of doubled bandwidth is the reduction in the number of network devices required by the system, thereby lowering power consumption and improving reliability.

In addition, Tomahawk 6 is built on open standards. This means that customers will not be locked into proprietary network switch technologies, such as the ones promoted.$NVIDIA (NVDA.US)$This directly targets the weakness of NVIDIA's closed ecosystem.

Releasing "breakthrough" product news 48 hours before the Earnings Reports led to a nearly 3.3% increase in Broadcom's stock price, breaking last December's historical high point and bringing the Market Cap close to 1.2 trillion dollars for the first time.

Wall Street unanimously optimistic about the upcoming Earnings Reports.

In the past week, at least six Wall Street firms have raised the Target Price for Broadcom ahead of the second quarter Earnings Reports scheduled for release on Thursday evening.

Citigroup Analyst Christopher Danely reaffirmed a Buy rating on Broadcom Stocks on Monday and raised the Target Price from $210 to $276.

Danely stated in a client report that he expects Broadcom to report results exceeding market consensus expectations, primarily driven by the continued strong performance of the AI Business. He expects the AI Business could account for about 30% of Broadcom's revenue this year.

Analysts from Cantor Fitzgerald also predict that Broadcom will achieve "better-than-expected results and raise guidance." They are particularly focused on the recent demand for custom silicon chips and the ramp-up of production for Google's next-generation TPU v6 and the upcoming v7p.

Although NVIDIA dominates the AI chip market, Broadcom and Marvell Technology are gaining attention by providing custom silicon solutions to major tech clients.

Analyst Jay Goldberg from Seaport noted that despite concerns regarding Marvell's competitive position in custom ASICs, the company's business growth last quarter outpaced that of NVIDIA, which is a Bullish Signal for Broadcom.

Melius Research Analyst stated in last week's report that Broadcom remains one of the "must-hold" AI Stocks, being a leader in the field of network and other areas as a fabless chip supplier. The company's switch Business accounts for about 30% of its total AI revenue, which is expected to grow in the coming years as the company expands its AI chip clusters.

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