Broadcom's Stock Soars as AI Chip Innovation Fuels Market Confidence
2min read As of last week, Broadcom Inc. (AVGO) saw its stock rise by 3.50%, marking three consecutive days of gains, and a 5.67% increase over the past three days. This past week, the stock increased by 5.85%, and year-to-date it has grown by 2.42%, with a current market valuation of $1,112.966 billion.
On Friday, Broadcom's stock rose over 2% in pre-market trading, reaching $235.23. This surge came after Barclays analyst Thomas O'Malley reiterated a "buy" rating and increased the price target from $205 to $260, reflecting strong investor confidence.
In the competitive arena of AI chips, Broadcom is aggressively advancing its technology. The company recently introduced 3.5D packaging to manufacture larger AI chips, utilizing a mix of 3D stacking and 2.5D lateral placement within its Extreme Dimension System-in-Package (XDSiP). This innovation allows the integration of over 6,000 square millimeters of silicon, supporting up to 12 high-bandwidth memory units, aimed at meeting the hefty demands of AI models.
One of Broadcom's key advances is in adopting face-to-face 3D chip stacking using hybrid bonding, which forgoes solder bumps for a direct copper post connection. This method creates thousands of connections per square millimeter, significantly boosting the speed of signal transmission between silicon layers, outperforming current standards by a sevenfold increase.
Although Broadcom does not directly compete with NVIDIA's GPUs, integral to cutting-edge data centers, it partners with tech giants like Google to develop custom accelerator chips, known as XPUs. These accelerators form a crucial component of vast server clusters needed for training AI models, with some setups growing up to one million accelerators.
Broadcom's XDSiP technology is reportedly used by major clients in the consumer AI sector. The first 3D stacked accelerators using this technology are anticipated in early 2026, highlighting the company’s goal to cater to the burgeoning AI market, predicted to reach $60 to $90 billion by 2027.
Broadcom's strategic innovations are crucial as the semiconductor industry faces the diminishing returns of Moore's Law. By dividing large chip designs into smaller, modular units, Broadcom leverages system-level packaging to expand silicon and enhance transistor density.
The company's 3.5D packaging marks a pivotal shift, utilizing TSMC's CoWoS technology to place accelerators laterally while vertically stacking silicon chips. This method not only optimizes space but also boosts connectivity and efficiency, all while reducing power consumption and improving the effective area for additional chips.
Broadcom's journey in 3.5D packaging showcases its commitment to leading the next generation of AI superchips. The company dismantles chip functions into categorized chiplets before reassembly, allowing for flexible optimization of power, area, and cost while prioritizing performance.
This modular approach enables the use of cutting-edge manufacturing for critical logic chips while employing mature processes for ancillary components, ensuring a balanced and cost-effective production pipeline.
Broadcom leverages hybrid bonding to stack smaller accelerator chiplets above larger base chiplets, facilitating direct silicon interconnects for power and data transfer. This setup reduces the physical constraints of traditional interconnect technologies and enhances mechanical strength.
Overall, Broadcom's strategies and innovative packaging technologies position it favorably to capitalize on the rapidly expanding AI market, with robust partnerships and a broad array of software solutions further strengthening its competitive edge.
