Nvidia’s CEO says Broadcom’s custom chips are not a threat to Nvidia. Broadcom’s application-specific integrated circuits (ASICs), also known as custom chips, are rapidly gaining popularity among hyperscalers such as Alphabet’s Google. This important partnership led to the successful launch of Google’s Gemini 3. The latest version of the AI model was trained on a Google chip known as a tensor processing unit (TPU), which was co-designed with Broadcom. But according to NVIDIA CEO Jensen Huang, there’s nothing to worry about, as the company’s stock has been under pressure since Gemini 3 launched late last month. Nvidia’s general-purpose graphics processing units (GPUs) are the most popular products in the AI space. “What Nvidia is doing is much more versatile,” Nvidia co-founder and CEO Jensen Huang told Jim Cramer in an interview following Monday’s announcement of Nvidia’s $2 billion stake in design software leader Synopsys. Jensen cited the new partnership as an example, saying that “our technology is much more fungible” and “much more versatile” than what custom chips can offer. As part of the multi-year agreement, Nvidia and Synopsys will jointly develop new AI-focused tools for use across industries including aerospace, automotive, and industrial. “Nvidia can address a much broader market than just chatbots,” Jensen added, highlighting the difference between Nvidia’s chips and dedicated ASICs. “You’re now seeing real, tangible examples of opportunities that can be realized with our platform that no one else can.” Street agrees with Jensen that Nvidia remains the dominant force, but Broadcom is certainly making strides as well. Morgan Stanley raised its price target on Broadcom from $409 to $443 per share before the Synopsys announcement. Analysts also revised upward their custom chip revenue forecasts for fiscal years 2026 and 2027. However, he did not rule out NVIDIA and raised his price target for the AI leader from $235 to $250. Morgan Stanley maintained an overweight rating, equivalent to buy, on each stock. Bank of America also pulled the trigger on Broadcom, raising its price target to $460 from about $400 and reiterating its buy rating. Analysts say the success of Gemini 3 and the possibility of renting TPUs to Google’s external customers in the future is a positive sign for Broadcom. Last week, there were reports that Meta Platforms was considering TPUs. Nvidia responded at the time that its GPUs were “one generation ahead” of Google’s custom AI chips. Nvidia and Broadcom are both large holdings in the club’s portfolio. Jim Cramer admits that we probably could have owned the synopsis. “What an opportunity,” he said as Synopsys stock soared on the Nvidia news. Synopsys closed up nearly 5%, but is still down nearly 10% year-to-date. “But should people be worried about Broadcom? I want to stay out of horse racing,” Jim said. “Own them all, but don’t make them your entire portfolio.” (Jim Cramer’s charitable trusts are long AVGO, NVDA; see here for a complete list of stocks.) As a subscriber to Jim Cramer’s CNBC Investment Club, you’ll receive trade alerts before Jim makes a trade. After Jim sends a trade alert, he waits 45 minutes before buying or selling stocks in his charitable trust’s portfolio. If Jim talks about a stock on CNBC TV, he will issue a trade alert and then wait 72 hours before executing the trade. The above investment club information is subject to our Terms of Use and Privacy Policy, along with our disclaimer. No fiduciary duties or obligations exist or arise from your receipt of information provided in connection with the Investment Club. No specific results or benefits are guaranteed.
