Broadcom: A very merry AI
2024 will be remembered by market watchers as the year when the only game in town worth getting excited about was AI.
If you spent the year long in AI and all those that provide the backbone to the project, prepare yourself for a very merry Christmas; the bonus will be mighty and Santa will be flying the reindeer straight to your chimney to fill the stockings with swag. If, for some perverse reason, you found yourself on the short side, then you’d better be hoping for a Good King Wenceslas to be looking out in your general direction.
Nvidia has been leading the way among the makers of the mighty chips required to enable vast quantities of data crunching, with its share price up 180% in the year, but Broadcom hasn’t exactly been a kick in the teeth for investors, with its price up 90%, nudging its market capitalisation up to $1-trillion.
Broadcom’s share price jumped 20% when it announced that its AI revenues were up 220% in the year, and its CEO, Hock Tan, predicted that by 2027 Broadcom’s AI market would be somewhere between $60bn and $90bn, compared with the current $20bn.
Chipmakers have been an easy first course for investors to tuck into, as are the energy utilities that are going to have to provide the vast quantities of power required to support AI’s ravenous appetites. The next phase of investor focus is likely to be the companies that can sell AI-enabled products, such as software and IT services companies, before moving to industries that will be transformed.
Porsche SE: Dents in German cars
The years when German industry was the proudly beating heart of the European economy are looking like a fond memory, as it approaches the festive season in a mood that’s less “joy to the world” and a lot more “in the bleak midwinter”.
It used to churn out products that flew off the shelves around the world, benefiting from endless supplies of cheap Russian gas and an engineering heritage second to none, but now, with the announcement of a second consecutive year of negative GDP growth, it’s looking like the six-stone weakling preparing to get sand kicked in its face.
There’s been an endless stream of bad news from the manufacturing sector, with iconic names like Thyssenkrupp announcing widespread redundancies, and the 200-year-old shipyard Meyer Werft needing a $423m public bailout to avoid bankruptcy.
With reports predicting that 20% of German industrial production is in danger of disappearing by 2030, it’s no surprise that Porsche SE, the holding company of the Porsche-Piëch family, has joined in the wailing and gnashing of teeth with the announcement that it is writing down the value of its stake in Volkswagen (VW) by 40% and its stake in Porsche AG by a third.
VW is locked in a mighty battle with union IG Metall, which is a long way short of gruntled with the company’s plans to close factories and lay off tens of thousands of workers.
Since the pandemic started, VW’s market share in China has nearly halved as local brands such as BYD have become increasingly competitive. Drastic change is required to make sure the people’s car has a future.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.