By Nate Wolf
Broadcom stock jumped Monday after the chip maker extended its longstanding partnership with Apple.
Broadcom will supply Apple with custom application-specific integrated circuits, known as ASICs, through 2031, it said in a securities filing. The collection of long-term agreements position Broadcom as a crucial supplier for "edge" artificial intelligence.
Broadcom stock rose 4.1% to $375.13 on Monday. That is a nice bump for shares that had tumbled 25% from their all-time closing high of $481.57 on June 2.
Apple has been one of Broadcom's leading customers since 2010, notably buying hardware to assist with wireless connectivity. ASICs — custom AI accelerators — could be even bigger business for the chip maker.
After years of lagging behind Magnificent Seven competitors in developing an AI strategy, Apple is now focused on integrating AI directly into its phones, laptops, watches, and tablets. Industry insiders refer to this practice of hosting AI applications on local devices as "edge AI."
"Apple silicon is arguably the best consumer edge inference platform in the world," Melius Research analyst Ben Reitzes wrote in a note Monday.
Who provides that silicon? Broadcom, at least through 2031.
Barron's wrote favorably about Broadcom stock in July, noting the company provides custom AI processors for Alphabet's Google, Meta Platforms, and OpenAI, among others. OpenAI revealed its Broadcom-enabled chip, dubbed Jalapeño, last month.
With the Apple pact extended, Broadcom will have custom designs in both data centers and at the "edge" for years to come.
Write to Nate Wolf at [email protected]
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