Broadcom Stuck in NVIDIA's Shadow

Broadcom Inc. shares have been stagnant this year, and it's unlikely that things will improve anytime soon.

The company holds a significant market share of 70% in ASICs, which is similar to Nvidia's dominant position. However, Broadcom now faces growing competition, forcing the company to either cut prices or risk losing market share as hyperscalers increasingly opt for multi-sourcing custom AI ASICs, with Google being an example.

This has led to a decline of 15% in AVGO shares since our sell call, and we don't think it's time to reconsider. The idea that 'all roads lead to ASIC' is no longer exclusive to Broadcom, as other companies are now entering the market.