The artificial intelligence boom is reshaping the technology landscape as industry giants Broadcom, Oracle and Samsung make moves to capitalize on the demand for AI chips and cloud computing resources.
From soaring stock prices to ambitious sales targets and chip technologies, these companies are positioning themselves to be key players in the evolving AI market.
Broadcom’s shares skyrocketed Thursday (June 13) after the chip maker delivered a rosy annual earnings forecast, underscoring the demand for semiconductors powering AI.
The California-based company supplies chips and networking tools to support AI applications. Its stock has risen 76% over the past year. The closing price Wednesday (June 12) of $1,495.50 put Broadcom’s valuation at roughly $600 billion, but the surge could add more than $90 billion to its market capitalization.
Even with the recent gains, Broadcom trades at a more modest valuation than some of its peers. Its shares fetch about 28 times expected earnings, compared with price-to-earnings ratios of roughly 40 for both Nvidia and Marvell Technology.
Broadcom raised its forecast for annual revenue from AI-related chips to $11 billion from $10 billion, citing strong demand from hyperscaler clients, widely believed to be Meta Platforms and Alphabet’s Google. The company also boosted its projections for annual revenue and core profit.
The company’s bullish outlook highlights the role chip makers play in the adoption of generative AI technologies, which require vast amounts of computing power to create human-like text, images and videos.
Oracle’s stock surged as investors cheered the software giant’s new partnerships with AI powerhouses and expanding presence in the cloud computing market. The rally followed Oracle’s fourth-quarter earnings report, which showed revenue of $14.3 billion, up 3% year over year.
It was Oracle’s $98 billion in remaining performance obligations (RPO), a measure of future contracted revenue, that caught investors’ attention. CEO Safra Catz attributed the strong RPO to large sales contracts signed in the third and fourth quarters, primarily driven by demand for Oracle’s cloud services to train AI models.
Oracle’s stock jump was further fueled by the company’s announcements of new partnerships with Microsoft-backed OpenAI and Google. Oracle will provide additional computing capacity to support OpenAI’s rapid growth while also bringing its database offerings to Google Cloud, expanding its reach in the competitive cloud computing market.
The AI partnerships underscore Oracle’s push to become a key player in the AI industry as businesses increasingly seek cloud computing resources to develop and deploy AI applications.
Samsung, the world’s largest memory chipmaker, unveiled a new contract chipmaking technology Wednesday, setting a goal to increase its AI chip sales ninefold by 2028.
The South Korean tech giant also revealed that business collaboration across the company and streamlined supply chain management has led to a 20% reduction in product delivery time, a move that could help it close the market share gap with foundry leader Taiwan Semiconductor Manufacturing.
Speaking at the Samsung Foundry Forum (SFF) 2024 in San Jose, California, Choi Si-young, Samsung’s foundry business chief, emphasized the role of high-performance, low-power semiconductors in the implementation of AI technologies. Samsung plans to introduce an integrated, co-packaged optics technology alongside its proven GAA process optimized for AI chips, offering customers a one-stop solution for their AI needs.
Samsung reaffirmed its commitment to begin mass production of the 2-nanometer process for mobile applications in 2025, with plans to expand its use to other areas in subsequent years. The company intends to apply the advanced technology to high-performance computing (HPC) chips for supercomputers and computer clusters in 2026, followed by automotive applications in 2027.
The new contract chipmaking technology and AI chip sales target underscore Samsung’s determination to capitalize on the growing demand for AI-focused semiconductors. By offering cutting-edge manufacturing processes and integrated solutions, the company aims to solidify its position as a key player in the evolving AI chip market.
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