Broadcom's $10B AI Chip Orders Challenge Nvidia's Market Position

Nvidia's stock recently rebounded despite concerns over increasing competition from Broadcom, which secured a $10 billion order for custom AI accelerators that could challenge Nvidia's dominance in AI GPUs. Citi analyst Atif Malik downgraded Nvidia's price target partly due to expected revenue losses from this competition, estimating a $12 billion reduction in Nvidia's 2026 GPU sales, especially as companies like Meta develop their own chips. However, some analysts like KeyBanc's John Vinh maintain optimistic views, citing Nvidia's strong CUDA software ecosystem and suggesting multiple winners can coexist in the AI chip market. Broadcom's strong profitability, driven by demand for custom accelerators among hyperscale customers, highlights its growing role in the AI chip sector alongside Nvidia. Additionally, OpenAI's increasing cash burn and expanded chip budgets suggest that Broadcom's orders may not directly cannibalize Nvidia's sales but rather reflect an overall market expansion. Overall, while Broadcom's rise poses a threat to Nvidia's market share, many experts believe the AI chip market's growth will allow both companies to thrive.