Nvidia Corp. NVDA shares traded lower Friday after Broadcom Inc. AVGO delivered stronger-than-expected quarterly results and confirmed a landmark partnership with OpenAI that could intensify competition in the artificial intelligence hardware market.
While Nvidia dominates the industry with its general-purpose GPUs that train large-scale AI models, Broadcom has carved out leadership in networking chips and custom application-specific integrated circuits (ASICs) for hyperscale data centers.
With cloud providers increasingly demanding tailored solutions, Broadcom’s bespoke hardware is emerging as a quiet but significant challenge to Nvidia’s GPU supremacy.
Also Read: Broadcom Stock Jumps After Nvidia Forecasts Massive AI Demand
For its fiscal third quarter, Broadcom reported revenue of $15.95 billion, up 22% year-over-year and above consensus estimates. Adjusted earnings per share came in at $1.69, topping the $1.65 forecast. Growth was driven by strong demand for custom AI accelerators, networking products, and VMware.
AI-related revenue surged 63% to $5.2 billion, and CEO Hock Tan projected it will rise further to $6.2 billion in the fourth quarter. Broadcom guided revenue of about $17.4 billion for the period, also ahead of expectations.
Adding to Nvidia’s pressure, Tan confirmed a $10 billion custom chip deal with a “major customer,” identified by the Financial Times as OpenAI. Production is expected to begin next year, with volume shipments starting in 2026.
The move mirrors strategies by Alphabet GOOGL GOOG, Amazon.com AMZN, and Meta Platforms META, all of which developed proprietary processors to cut costs and fine-tune AI performance.
By leveraging Broadcom’s chips, OpenAI aims to meet compute demand from ChatGPT’s 700 million weekly users. Analysts at HSBC cautioned that custom silicon could expand faster than Nvidia’s GPU business by 2026, reshaping the competitive landscape.
So far this year, Nvidia stock has gained 28%, while Broadcom shares have advanced more than 32%.
Price Action: NVDA stock is trading lower by 0.88% to $170.15 premarket at last check Friday. AVGO is up 9.54%.
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