Nvidia defends its dominance within the synthetic intelligence area with its software program moat. Many corporations have constructed their AI software program stacks primarily based on Nvidia CUDA to harness the ability of GPUs, and since Nvidia’s software program solely works with its GPUs, they can not swap to rivals’ GPUs.
This technique has labored effectively for the corporate; nonetheless, issues are altering, and Broadcom simply took a slice of Nvidia’s AI pie.
Broadcom’s enhance in AI market share can solely shock individuals who do not know that it already has a long-standing partnership with Google, which birthed its tensor processing models (chips specialised for AI work).
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The corporate additionally works with Meta Platforms and ByteDance on their customized AI chips. Through the earnings name, Broadcom introduced a partnership with one other main AI firm.
On September 4, Broadcom (AVGO) reported its outcomes for Q3 of fiscal 2025.
Hock Tan, president and CEO of Broadcom, expects AI semiconductor income to develop to $6.2 billion within the subsequent quarter.
Income of $15.95 billion for the third quarter, up 22% YoY.
Internet revenue of $4.14 billion for the third quarter.
Adjusted EBITDA of $10.7 billion for the third quarter, or 67% of income.
Diluted earnings per share of $0.85 for the third quarter;
Quarterly frequent inventory dividend of $0.59 per share.
Income steerage of roughly $17.4 billion, a rise of 24% YoY.
Adjusted EBITDA steerage of 67% of projected income.
Through the earnings name, Tan mentioned that the corporate made a cope with a brand new buyer to construct their AI accelerators, and the shopper dedicated to over $10 billion in orders of AI racks primarily based on the corporate’s XPUs.
Broadcom did not reveal who the brand new buyer is, however Monetary Occasions’ contacts confirmed that OpenAI is the brand new consumer.
With OpenAI becoming a member of Google, Meta, and ByteDance looking for cheaper AI chips, it’s clear that the majority corporations would swap from Nvidia to one thing else if it weren’t for CUDA. However, since they’re investing in these chips, they have to additionally slowly make modifications to their software program stacks.
Extra AI Shares:
One other piece of tech that helps Nvidia dominate the market is NVlink. It helps join a number of GPUs and talk at very excessive speeds. Many corporations have teamed as much as work on another referred to as Extremely Accelerator Hyperlink, together with Google, AMD, Intel, Meta, Apple, Hewlett Packard Enterprise, Microsoft, Broadcom, and lots of extra.
