Shares of Broadcom (AVGO -1.47%) were moving higher today on reports that it was teaming up with Apple (AAPL -1.32%) on an artificial intelligence (AI) chip.
The move could accelerate Broadcom's growth in a sector dominated by Nvidia thus far and strengthens its relationship with Apple, the world's largest consumer electronics.
As of 10:21 a.m. ET, Broadcom stock was up 4.9% on the news.
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Two tech titans team up
The Information reported this morning that Apple is developing its first server chip for AI and working with Broadcom on the networking technology.
The details of the partnership aren't clear yet, but it could be a significant opportunity for Broadcom, as Apple's installed base of more than 2 billion devices and its recent launch of Apple Intelligence should make it a major player in AI, though thus far the technology has yet to move the needle for Apple.
Apple is Broadcom's biggest customer, accounting for 20% of its revenue in fiscal 2023 and 2022, so it's not surprising to see the two companies teaming up on AI, especially given Broadcom's strength in networking chips.
What's next for Broadcom?
The news comes out ahead of Broadcom's fourth-quarter earnings report tomorrow, which is expected to show strong growth on the top and bottom lines, fueled in part by its acquisition of virtualization software VMware.
Analysts expect revenue in the quarter to grow 51.2% to $14.1 billion, and adjusted earnings per share of $1.39, up from $1.11.
However, investors will be closely focused on the company's AI growth, as the new technology has taken center stage in the chip sector. The company said earlier that it expected AI revenue of $12 billion for fiscal 2024. Keep that number in mind when the report comes out.
