Broadcom's CEO Hock Tan announced that their custom chip for OpenAI, 'Jalapeno,' outperforms Nvidia's Grace Blackwell at half the cost for inference workloads, despite weak Q4 guidance. This revelation, coupled with aggressive AI revenue projections, signals a significant competitive shift in the AI chip market and could be a major catalyst for Broadcom.
Broadcom's CEO Hock Tan made a bold claim that their custom 'Jalapeno' chip for OpenAI surpasses Nvidia's Grace Blackwell in performance per watt, latency, throughput, and power for inference workloads, at half the cost. This directly challenges Nvidia's dominance in the AI chip market and could lead to significant market share shifts, especially given Broadcom's aggressive AI revenue projections to $230 billion by 2028. While Broadcom issued soft Q4 guidance, the long-term implications of this custom chip advantage and the 'explosion of business' Cramer refers to could be a major positive catalyst for AVGO, and a potential headwind for NVDA as competition intensifies in the high-growth AI sector.