Nvidia Corp (NASDAQ:NVDA) may dominate AI headlines, but JPMorgan's Harlan Sur thinks Broadcom Inc (NASDAQ:AVGO) deserves more credit for building the infrastructure that makes artificial intelligence work.
From cutting-edge XPUs to networking muscle and enterprise software, Broadcom is the "#2 global AI semiconductor supplier" and the top name in custom ASICs, Sur says in a research note.
XPUs Built For A Million-Cluster World
Broadcom's AI strategy centers on its custom AI XPU business, which is firing on all cylinders. Sur highlights the company's collaboration with four AI customers and notes that it's "on track to tape-out first-generation AI XPU products this year."
He believes these customers--including OpenAI--are aiming to build massive AI clusters of "1 million XPU" units, which would place Broadcom at the heart of the AI buildout.
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Networking Gains From AI Compute
AI models require not just computing power but ultra-fast networking. That's where Broadcom's scale-up networking comes in, with 5–10x more dollar content per unit than traditional networks. As Sur puts it, "AI compute workloads continue to drive strong networking demand."
Broadcom's leadership in next-generation interconnects and silicon photonics further cements its position as the go-to vendor for high-performance infrastructure.
VMware Is The Sleeper Growth Engine
Don't overlook the software side. Sur notes VMware's Cloud Foundation (VCF) platform is set to "sustain strong growth until late 2026/2027," with revenues expected to hit $20 billion before settling into mid- to high-single-digit growth.
Despite lower gross margins on custom AI chips, Sur expects Broadcom to keep expanding operating margins due to business leverage.
Importantly, "the team is focused on reinvesting in the business," says Sur, not chasing distractions like M&A.
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