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Trader's Diary

Economic calendar

February
2025
Definition of terms:
Earnings
IPOs
Splits
Week 8

OpenAI and Broadcom’s Strategic AI Chip Development

Date: 30.10.2024

Today, I've been closely following the news about OpenAI's plans to collaborate with Broadcom Inc. on its own AI chip, designed specifically for inference – the process of running AI models after they've been trained. This potential game-changer is attracting the attention of the tech world, as OpenAI seeks to develop a solution focused on responding to user requests rather than traditional training dominated by Nvidia's graphics processing units (GPUs).

The scale of this collaboration is significant, as OpenAI has reportedly been preparing for this shift for about a year and has been consulting not only with Broadcom, but also with Taiwan Semiconductor Manufacturing Co. (TSMC), the world's largest contract chipmaker. While both companies have been reluctant to comment publicly on these discussions at an early stage, the implications for the AI and semiconductor industries are clear. OpenAI is firmly focused on accelerating its capabilities in deploying an AI model, and the move could reduce its reliance on Nvidia by introducing a customized chip for the inference phase.

Broadcom's strength in ASIC development

For investors, it is worth noting Broadcom's strategic position in this partnership. Broadcom is known for its expertise in designing application-specific integrated circuits (ASICs), a niche market that aligns with OpenAI's ambitions. Broadcom's ability to design single-purpose chips that meet customer specifications gives it a valuable advantage that has already been tapped by major players such as Google and Meta Platforms. Notably, Broadcom shares rose 4.2%[1] after the news, closing at $179.24 in trading in New York. This adds to the company's strong performance this year, with the stock already up 54%. The reaction suggests that investors are optimistic about Broadcom's expanding customer base and its strategic entry into AI-specific chip design.

Cost-effective partnership strategy

Clearly, OpenAI has made some hard turns in its approach. Initially, the company appeared to be interested in creating its own network of chip foundries, but the logistics and associated costs reportedly steered them towards working with established partners such as Broadcom. This choice could accelerate development while managing capital more efficiently. In addition, OpenAI's leadership is considering partnerships to build data centers, with CEO Sam Altman reportedly presenting this vision to both the U.S. government and international investors.

Looking to the future: A strong foundation for growth

Ultimately, OpenAI's potential custom chip could represent a crucial step in optimizing their technology and maintaining a competitive advantage. As I watch this collaboration, Broadcom's deep expertise and OpenAI's commitment to investing in AI-specific infrastructure represent a compelling story for growth. For investors focused on the AI and semiconductor markets, these strategic moves could mark a powerful shift that redefines the AI hardware landscape and creates new growth trajectories for both OpenAI and Broadcom in an AI-powered future.

 

* Past performance is no guarantee of future results


[1] Broadcom Inc. Price Performance Over the Past Five Years: https://tradingeconomics.com/avgo:us

Date: 19.2.2025
Intel and Speculation About a Possible Company Split

Today, I noticed that Intel's stock has risen by nearly 50% from its February low, clearly indicating that the price is reacting to ongoing speculation about a potential company split.* Intel has been struggling with the loss of its technological edge and market share, with its performance lagging behind competitors like Nvidia, which dominates the AI chip segment. Ongoing negotiations between TSMC, Broadcom, and the Silver Lake investment group suggest that Intel's leadership is actively exploring ways to regain its market position and restore investor confidence.

Date: 12.2.2025
Alibaba and Apple Forge AI Partnership in China

This morning, I noticed a sharp increase in Alibaba shares – almost 8%1 since last week. The stock thus continues the bullish trend that we last saw in September last year.* I immediately started to find out what was behind it, and I came across an interesting piece of news. Apple is reportedly working with Alibaba to develop AI features for iPhones in China. This news immediately caught my attention, so I started looking for ways to benefit from it.

Date: 5.2.2025
AMD Slips After Earnings Report

For us investors following the semiconductor sector, today was very significant. AMD announced its results for the fourth quarter of 2024, beating expectations in terms of both sales and profit. Nevertheless, the shares fell by more than 9% after the end of regular trading hours.* This decline subsequently raised questions that I also dealt with. Is this an overreaction of the market, or is it a legitimate warning sign?

Date: 29.1.2025
ASML Exceeds Expectations: A Buying Opportunity?

Today's trading day was very interesting for me as I focused on the results of ASML, a leading player in chip manufacturing equipment, which published its results for the fourth quarter. ASML reported orders worth €7.09 billion, well above expectations. This order intake is a significant indicator that the demand for advanced equipment, driven by the growth of the AI field, remains strong.

Date: 22.1.2025
A New Dawn for AI Investment in the US

Yesterday, I witnessed a groundbreaking shift in the investment landscape as President Donald Trump unveiled Stargate, up to $500 billion private sector initiative designed to revolutionize artificial intelligence (AI) infrastructure in the United States. This announcement, featuring major players like Oracle, OpenAI, and SoftBank, caught my attention as a significant moment in the AI race, promising opportunities for investors like me.

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