Broadco (Nasdaq: Avgo) He had a whopping 2024, and the stock was more than doubled. After such a launch, many investors could ask themselves how much potential is upside down.
Broadcom is in a big position in the artificial intelligence industry (AI). It helps to design customized AI accelerators and also sells switches to connect in AI data centers. But after the appearance of Deepseek R1 as a less complicated demanding model, is Broadc still solid stock?
Broadcom is not just a job dedicated to serving the AI market. Its products include mainframe software, virtual desktop (software based on mainframe that enables users to access their personal environment and software from any device) and AI product line. However, most of the excitement around the stock has launched a virtual work surface and AI products lately.
At the end of 2023 he completed the acquisition of VMWARE, which provides a virtual table surface software. This has added a lot of companies growth, but Broadcom’s management has angered the established customers of VMWARE to some of his procedures.
Broadcom hit VMWARE clients with an increase in jaw prices (AT&TFor example, he said his VMWare accounts increased by 1,050%), which encouraged the lawsuit. Many customers started looking for somewhere else for virtual work software.
On the AI side, Broadcom generated huge amounts of growth of revenue from the sale of hardware for giant AI data centers now being built. The sale of adapted AI accelerators and network components increased by $ 220% to $ 12.2 billion in Broadcom’s fiscal 2024, which ended on November 3, which represented about 24% of total revenue.
However, the shares fell by more than 17% on Monday after the announcement of the Deepseek model R1 AI, which was allegedly dressed by only $ 5.6 million. However, the market reaction may have been a little rash.
There are a lot of skepticism about that figure of $ 5.6 million, because Deepseek did not dive into details of how it was performed. However, the R1 has clear efficiency in relation to many of the domestic developed generative AI models, so this issue should not be neglected.
Nonetheless, the current stance of the market is: “Great technology will not be constantly spent all that money to build AI infrastructure if technological companies can be more effectively trained and launched by AI software.” As a result, any company whose job was tied to providing hardware for these servers saw that the sale of sale this week was sale.
