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Nvidia stock has entered correction territory, posting a 5% drop over the past five days. Despite this setback, the chip giant maintains impressive growth of 160% so far this year. On the other hand, Broadcom has captured the attention of investors after a dizzying increase of 40% in just one week and a cumulative increase of more than 120% in the year.
Nvidia shares lose 5% in the last 5 days. Source: Yahoo Finance
Nvidia, a brief pause after a formidable year
On Monday, Nvidia officially reached correction territory, defined as a drop of at least 10% from its all-time closing high. This occurred when the value of its shares closed below the $148.88 reached in November. Although it faces a temporary setback, the company remains a benchmark in the technology industry thanks to its GPUs (graphics processing units), which have dominated the market as the preferred option for training large-scale artificial intelligence (AI) models, such as those developed by OpenAI.
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Its recent decline does not overshadow Nvidia’s central role in the AI revolution, but it could reflect profit-taking after an exciting year for the semiconductor market.
Broadcom, the protagonist of the week
While Nvidia takes a hiatus, Broadcom is enjoying an unstoppable rally. Its shares have soared following the release of fourth-quarter financial results, which exceeded expectations and were accompanied by an optimistic outlook for revenue in the next quarter.
This exceptional performance has led Wall Street analysts, including Goldman Sachs, to adjust upward their estimates for Broadcom, further boosting investor confidence.
In premarket Tuesday, Broadcom shares added another 0.8% gain. This growth not only responds to the company’s solid results, but also to its strategic focus on the development of customized chips for artificial intelligence, aimed at hyperscalers, the large cloud computing companies.
Broadcom shares advance 40% in the last 5 days. Source: Yahoo Finance
Broadcom’s future in the age of AI
During the recent earnings call, Broadcom CEO Hock Tan highlighted opportunities around AI. “We see an opportunity in the next three years in artificial intelligence,” he said. “Specific hyperscalers have begun their respective developments to create custom AI accelerators.” These custom chips represent a key bet for Broadcom in an increasingly competitive market.
Nvidia vs. Broadcom, leaders with different approaches
While Nvidia continues to lead in training large AI models, Broadcom’s focus on custom solutions underscores how both companies are positioned to capitalize on the growing demand for AI technologies. However, its recent stock market performance reflects the immediate impact of financial results and future prospects.
While Broadcom enjoys its rise thanks to renewed investor confidence, Nvidia faces a temporary adjustment to its meteoric rise. For experts, this could be just a pause in the unstoppable march of these two technological giants towards the future of artificial intelligence.
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