OpenAI Is Building Its Own AI Chip With Broadcom. Should Nvidia Investors Be Worried?

Yahoo Finance ·

Shares of chipmaker Nvidia ( NVDA 1.42% ) have been the purest way to bet on the artificial intelligence (AI) boom. So when one of its largest customers shows up with a chip of its own, investors pay attention. On June 24, OpenAI and Broadcom ( AVGO 3.39% ) pulled the wrapper off Jalapeño, OpenAI's first custom AI chip. Designed by the maker of ChatGPT and built with Broadcom, it's the first piece of a sweeping plan the two unveiled last fall to deploy 10 gigawatts of OpenAI-designed accelerators between the second half of 2026 and the end of 2029. Headlines billed it as a direct strike at Nvidia. So should Nvidia investors be worried? A measured yes -- but probably less than the headlines suggest. Broadcom's custom-silicon business is booming, and the numbers are hard to ignore.

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OpenAI and Broadcom unveiled their first custom AI chip, 'Jalapeño', and announced plans to deploy 10 gigawatts of OpenAI-designed accelerators from the second half of 2026 through the end of 2029. The entry of large AI customers into self-designed hardware intensifies competition for Nvidia (NVDA), but Broadcom's manufacturing capabilities, OpenAI's workload-optimized design, and NVDA's software ecosystem limit the prospect of an immediate disruption. In the near term, custom ASIC designers and manufacturers, Broadcom (AVGO), data-center infrastructure, foundries and OSATs in the supply chain are expected to benefit; in the long term, the move poses downside risk to NVDA's GPU demand growth.

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