AI Market Boosts Chipmakers: Nvidia, Wolfspeed, and Broadcom Rise

The booming AI market presents significant opportunities for chipmakers. Nvidia is experiencing massive growth, while Broadcom shows strong revenue potential. However, Wolfspeed faces challenges despite some expansion, indicating mixed performance in the sector.

Date: 08-01-2025

AI Rating: 4

Market Dynamics and Company Performance
The analysis highlights the fast-growing artificial intelligence (AI) market, favorably impacting companies like Nvidia, which has seen a remarkable stock price increase. However, this growth varies among AI-related chipmakers, particularly Wolfspeed and Broadcom.

Wolfspeed's Struggles
Wolfspeed, a manufacturer of silicon carbide chips, has struggled with growth due to a sluggish electric vehicle (EV) market. Its revenue surged by 42% in fiscal 2022 but only grew by 24% in fiscal 2023 and a mere 6% in fiscal 2024. Furthermore, its adjusted gross margin fell significantly from 36% in fiscal 2022 to just 13% in fiscal 2024.

This decline indicates serious concerns regarding profitability, as Wolfspeed remains unprofitable in GAAP terms, and analysts project a 2% revenue dip for fiscal 2025 with an expanded net loss of $975 million. Hence, this information results in a negative outlook.

Broadcom's Growth Trajectory
Broadcom, on the other hand, shows accelerated revenue growth, rising by 21% in fiscal 2022 and up 44% in fiscal 2024, driven significantly by its AI data center chip sales, which saw an increase to $12.2 billion and accounted for 24% of its overall revenue. Analysts expect 19% revenue growth for fiscal 2025 and a tripling of its GAAP EPS, indicating strong underlying performance.

Conclusion
Overall, while Nvidia continues to shine and Broadcom demonstrates strong momentum fueled by AI, Wolfspeed's ongoing challenges and negative earnings position it unfavorably against its peers.

Stocks: NVDA AVGO WOLF