Broadcom’s AVGO introduces the Tomahawk Ultra Ethernet switch to drive AI revenues, boasting impressive capabilities like 51.2 terabits per second throughput and 77 billion packets per second. The chip’s compatibility with previous generation models makes it easy for customers to upgrade, positioning Broadcom as a major AI infrastructure provider.

As Broadcom ramps up its AI offerings with Tomahawk Ultra, competition from NVIDIA’s NVDA GPUs and AMD’s EPYC CPUs challenges its market dominance. While NVIDIA’s vertically integrated architecture leads in GPU performance, AMD’s strong demand from hyperscalers and 57% AI revenue growth pose a threat to Broadcom’s position in the AI chip market.

Despite Broadcom’s strong performance with a 20.9% YTD return, the stock appears overvalued with a forward price-to-sales ratio of 18.41X. Analysts predict a 33.87% YOY growth in Q3 earnings and a 36.34% increase in fiscal 2025 earnings. With a Zacks Rank #3, Broadcom faces valuation concerns amidst its AI growth prospects.

Zacks Investment Research highlights Broadcom’s potential for AI revenue growth with the Tomahawk Ultra switch, despite valuation concerns. Investors can explore the top stock picks with money-doubling potential, including Director of Research Sheraz Mian’s top recommendation. Access these insights and more with Zacks Investment Research’s latest recommendations.

Read more at Nasdaq: Can Growing Adoption of Tomahawk Ultra Boost Broadcom’s AI Revenues?