Broadcom: Little gorilla grows up
Nvidia may have grabbed more of the headlines as the tech giants hurl money at the processing power needed to train large language AI models, but Broadcom has outperformed its more storied rival over the past year.
Nvidia remains the 800-pound gorilla of the sector, with its market capitalisation sitting comfortably at about $2.7-trillion, but Broadcom joined the trillion-dollar valuation club briefly in December, before retreating to around $840bn.
Its share price was up about 18% in after-hours trading last week after it announced results that beat Wall Street’s expectations and suggested that its prospects were a brighter shade of rosy.
While Nvidia designs state-of-the-art off-the-shelf chips, Broadcom concentrates on building custom AI chips known as XPUs and assorted infrastructure for its hyperscaler customers, which are rumoured to include Google, Meta and ByteDance. Its CEO, Hock Tan, is coy about revealing his client list, but there aren’t many players in this rarefied end of the market, and he has hinted that four more major clients will be added to the roster in the near future.
Back in December Tan estimated that his top three customers would be investing up to $90bn in AI by 2027, with similar numbers coming from the next four clients, and Broadcom’s AI-related business is expected to account for 30% of its total revenue by July, and to continue to grow by 40% year on year.
Despite all the chaos and bluster emanating from the White House, the AI sector is witnessing mighty war chests place some truly unprecedented bets.
Venture Global: Running low on gas
Many would have thought that Venture Global would be uniquely positioned to benefit from its close relationship with the Trump administration — with energy secretary Chris Wright popping up at a rumble to celebrate an $18bn expansion of its Plaquemines liquefied natural gas (LNG) export terminal, and assuring the assembled dignitaries: “I cannot overstate how important what you’re doing is and how aligned it is with the agenda of President Donald Trump”.
Its CEO, Mike Sabel, has been tucking in at Mar-a-Lago and the company chucked in $1m for the president’s inauguration, yet amid all the backslapping its share price dropped a healthy 36% in the day.
Management had hoped to price its January IPO at the $110bn mark, but eventually got it away at $60bn, and it’s been downhill ever since to a market capitalisation of about $23bn.
Despite market fundamentals that should have been right up its strasse, Venture Global surprised Wall Street with results that showed lacklustre sales and export volumes, profits below expectations and a $1.3bn rise in terminal construction costs, and the market responded by giving the share a healthy kicking.
The company is defending a class action lawsuit around the IPO, and is involved in a $5bn arbitration battle with some of its major customers over allegations that it failed to deliver on its long-term supply contracts, opting instead to cash in on the spot market when it spiked after Russia’s invasion of Ukraine.
Things could really turn south if a peace deal between Moscow and Kyiv enables cheap Russian gas to start flowing back into Europe, with predictably disastrous results for US LNG.
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