Shares of Broadcom Inc. (AVGO) experienced a decline of over 3% following the announcement of their new AI network chip, the Thor Ultra. This product is designed to compete directly with Nvidia’s offerings.
Introduction of the Thor Ultra Chip
The Thor Ultra is a significant advancement in networking technology. This chip is touted as the first 800G AI Ethernet network interface card. It targets large AI data centers equipped with over 100,000 specialized processing units known as XPUs.
Key Features of the Thor Ultra
- Supports data speeds of 800 gigabits per second.
- Enables the deployment of more chips in data centers.
- Equipped with full UEC feature compliance and Advanced RDMA capabilities.
According to Ram Velaga, Senior Vice President at Broadcom, Thor Ultra represents a breakthrough in AI networking. This innovation offers the performance and scalability necessary for future AI applications without vendor lock-in.
Market Context and Competitive Landscape
The Thor Ultra aims to compete with Nvidia’s networking chips. This competition is expected to intensify following Broadcom’s recent agreement with OpenAI to develop custom chips, projected to deliver 10 gigawatts starting in the second half of 2026.
Growth Potential in AI Sector
The AI market presents a significant opportunity for Broadcom. CEO Hock Tan previously estimated this market to be valued between $60 billion and $90 billion by 2027. This includes revenues from networking chips and data center processors that support entities like Google and OpenAI.
Investment Insights on Broadcom (AVGO)
As for investment considerations, Broadcom currently holds a Strong Buy consensus on TipRanks. The analysis includes:
- 27 Buy ratings
- 2 Hold ratings
- A highest price target of $460
- A consensus price target of $389.48, indicating a potential upside of 12.82%
Investors are closely watching Broadcom as it navigates this competitive landscape with innovative products like the Thor Ultra.
