Broadcom gets more Street approval, but Cramer says it’s not in a race with Nvidia
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Broadcom ‘s custom chips are no threat to Nvidia , according to the latter’s CEO. Broadcom’s application-specific integrated circuits (ASICs), also known as custom chips, have soared in popularity with hyperscalers, such as Alphabet ‘s Google. The key partnership led to the successful launch of Google’s Gemini 3. The latest iteration of the AI model was trained on Google’s chips known as tensor processing units (TPUs), co-designed by Broadcom. If you ask Nvidia CEO Jensen Huang, however, there’s nothing to worry about at his company, whose stock has been under pressure since Gemini 3 came out late last month. Nvidia’s all-purpose graphics processing units (GPUs) are the hottest commodity in AI. “What Nvidia does is much more versatile,” Nvidia co-founder and chief executive Jensen Huang told Jim Cramer in an interview following Monday’s announcement of Nvidia’s $2 billion stake in Synopsis , a leader in design software. “Our technology’s much more fungible” and “much more versatile” than what custom chips can offer, Jensen said, pointing to the new partnership as an example. As part of the multi-year agreement, Nvidia and Synopsis will co-develop new AI-focused tools for use across industries, including aerospace, automotive, and industrial. “Nvidia can address markets that are much, much broader, not just chatbots,” Jensen added, highlighting a difference between Nvidia’s chips and single-purpose ASICs. “You’re now seeing a real, tangible example of an opportunity that we could do with our platform that nobody else can.” While the Street agrees with Jensen that Nvidia remains a dominant force, Broadcom is certainly making a mark as well. Morgan Stanley, before the Synopsys announcement, raised its Broadcom price target to $443 per share from $409. The analysts also increased their estimates for custom-chip revenue for fiscal 2026 and fiscal 2027. They didn’t leave Nvidia out, however, raising their price target on the AI-leader to $250 from $235. Morgan Stanley kept its buy-equivalent overweight ratings on each. Bank of America also pulled the trigger on Broadcom, raising its price target to $460 from roughly $400 and reiterating its buy rating. According to the analysts, Gemini 3’s success, as well as the potential future possibility of renting out TPUs to external Google customers, is a positive sign for Broadcom. There was a report last week that Meta Platforms was considering TPUs. Nvidia said at the time in response that its GPUs are a “generation ahead” of Google’s custom AI chips. Nvidia and Broadcom are both big holdings in the Club portfolio. Jim Cramer admits that perhaps we could have also owned Synopsis, too. “What a great opportunity,” he said as Synopsys shares soared on the Nvidia news. While closing up nearly 5%, Synopsys was still down almost 10% year to date. “But, should people be worried about Broadcom? I want to get away from the horse race,” Jim said. “Own ’em all, but don’t make them your whole portfolio.” (Jim Cramer’s Charitable Trust is long AVGO, NVDA. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
