AI computing power investment trend has undergone a major shift! The market is betting real money on the strong rise of ASIC.

As of the Friday closing of the US stock market, the stock price of NVIDIA Corporation (NVDA.US) fell by nearly 3%, marking the first time in nearly two months that this global company faced the significant risk of falling below its milestone market cap of $4 trillion. The "AI Chip Dominator" NVIDIA Corporation saw its stock price drop by almost 5% during Friday's trading session, and from a weekly indicator perspective, NVIDIA Corporation's stock price has been falling for four consecutive weeks. For a company with a market cap of over $4 trillion, a nearly 5% drop is considered significant, highlighting the market's panic triggered by the disappointing US non-farm payroll data, as well as the surge in the AI ASIC market size led by Broadcom Inc., putting pressure on NVIDIA Corporation. Additionally, the stock price of Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR has shown strong momentum in recent days as it ranked second only to Broadcom Inc. in the performance of chip stocks in the US market. In the chip industry chain, Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR is considered the "eternal god" (YYDS). The demand for AI GPU and AI ASIC can't do without Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR, which has dominated the majority of chip outsourcing orders globally for many years due to its decades of expertise in chip manufacturing and its position at the forefront of chip manufacturing technology innovation and improvement, especially for chip outsourcing orders of the most advanced processes of 5nm and below. Looking back, although the extremely low-performing non-farm payrolls have dampened expectations of a US economic "soft landing," the market's expectations for a Fed rate cut have significantly increased, with the possibility of a 50 basis point cut in September even, which is favorable for the mega-cap growth stock NVIDIA Corporation. Mark Malek, Chief Investment Officer of Siebert Financial, stated that the 50 basis point move "will bring tailwinds to the stock market." "This will undoubtedly boost mega-cap growth stocks and give investors the green light to take on more risk." Therefore, Broadcom Inc.'s incredibly strong performance and future outlook have brought about market panic, with NVIDIA Corporation facing fierce competition from Broadcom Inc. in the field of AI chips. The rapid rise in revenue from AI ASIC launched by Broadcom Inc. in partnership with tech giants like Alphabet Inc. Class C, Meta, and Microsoft Corporation has led top Wall Street investment institutions and individual investors who have long been optimistic about NVIDIA Corporation's stock price and performance growth trend to feel panicked. Due to the strong revenue potential of AI ASIC and its possible imminent encroachment on the market share of AI GPU, their long-term performance growth expectations for NVIDIA Corporation are starting to adjust. AI ASIC and NVIDIA Corporation's AI GPU represent two completely different technological paths in the field of AI chips. Currently, the two largely compete in the market, especially in the AI ASIC sector, which offers very obvious cost-effectiveness and efficiency advantages over AI training/inference for large-scale cloud computing heavyweights and AI leaders like OpenAI. OpenAI's $10 billion "super order" to Broadcom Inc. and the explosive demand demonstrated by Broadcom Inc.'s performance highlight a crack in the expectations for NVIDIA Corporation's performance growth between 2026 and 2030. Broadcom Inc.'s strong rise forces analysts on Wall Street to moderately lower their previously high performance growth expectations, which is the core logic behind NVIDIA Corporation's sharp drop in stock price on Friday. NVIDIA Corporation's position in the "$4 trillion club" is being challenged as its stock price has experienced significant retracement in recent weeks. According to insiders cited by the media, Broadcom Inc. is helping OpenAI design and produce a customized AI accelerator chip (i.e., AI ASIC chip). The two companies plan to start delivering the first batch of AI chips in this series as early as next year. This move will pose a direct and powerful long-term competitive pressure on NVIDIA Corporation, the absolute leader in AI compute infrastructure, by Broadcom Inc. in the field of AI chips. In the third fiscal quarter, Broadcom Inc.'s semiconductor revenue related to AI infrastructure was approximately $5.2 billion, a year-on-year growth of up to 63%, exceeding the Wall Street average expectation of $5.11 billion. Broadcom Inc.'s management expects this category's revenue to reach about $6.2 billion in the fourth quarter, implying a potential year-on-year growth of nearly 70%, higher than analysts' previous expectation of about $5.82 billion. Prior to the earnings release, market expectations for Broadcom Inc.'s performance and future outlook data were very high, significantly boosting investors' bullish sentiment towards Broadcom Inc. and the entire AI compute industry chain. Broadcom Inc. CEO Hock Tan stated during the earnings call after Broadcom Inc.'s earnings announcement that after receiving over $10 billion in AI infrastructure orders from a new unnamed hyperscale customer (later revealed by the media to be OpenAI), the company expects a stronger growth in AI-related revenue for the 2026 fiscal year than previously anticipated. In the previous earnings call, Hock Tan said that the AI-related revenue outlook for 2026 would be similar to this year's growth trajectory, expected to be around 50% to 60%. In the Chinese stock market, the AI chip maker Cambricon Technologies Corporation, which is also betting on the ASIC route, is currently one of the hottest stocks in the Chinese market, with an increase of up to 95% since the beginning of the year. Major Wall Street firm Goldman Sachs Group, Inc. once again raised its target price for Cambricon, the "leading AI chipmaker in China" and the leader in "domestic chip substitution," only a week after its last raise. In its latest report published on September 1, Goldman Sachs Group, Inc. raised Cambricon's 12-month target price from RMB 1835 to RMB 2104, a 14.7% increase, and maintained a "buy" rating. The new target price indicates a potential 41% increase from the closing price on August 29, signaling a strong bullish trend for the stock. Cambricon's recent surge in stock price and performance highlights the intense investment heat in AI in China and the surge in "domestic chip substitution." In terms of performance, in the first half of 2025, Cambricon's operating income reached RMB 2.881 billion, a staggering year-on-year growth of 4347.82%, with a net profit of RMB 1.038 billion, a significant improvement from a loss of RMB 0.53 billion in the same period last year. The bullish logic of the AI compute industry chain remains strong, but funding is now shifting towards ASICs There is no doubt that Broadcom Inc.'s strong performance and future prospects have reinforced the "long-term bullish narrative" for the AI compute sector. However, the core of global net long positions has started to shift from the NVIDIA Corporation AI GPU chain to the AI ASIC chain. The continued explosive demand for AI compute power globally, coupled with the massive AI infrastructure investment led by the US government and the continuous investment from global tech giants in constructing large data centers, largely implies that the relentless "AI faith" sweeping NVIDIA Corporation, Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR, and Broadcom Inc., the leading companies in the AI compute industry chain, has not yet ended in terms of stock price "super catalysis," which has led to a bullish trend in global stock exchanges fueled by NVIDIA Corporation, Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR, and Broadcom Inc. It is under the leadership of NVIDIA Corporation, Alphabet Inc. Class C, Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR, and Broadcom Inc., the epic stock price surges and sustained strong performance this year, that an unprecedented wave of AI investment has swept through the US stock market and global stock market, driving the MSCI Global index to soar since April, recently hitting historic highs. The market capitalization of NVIDIA Corporation, currently over $4 trillion, saw a drop of nearly 5% during Friday's trading session. In contrast, the stock price of Broadcom Inc. surged by 16% at one point on Friday, hitting a historic high intraday and adding nearly $150 billion to its market capitalization, reaching about $1.6 trillion, highlighting the massive influx of capital towards Broadcom Inc. and the rapidly rising bullish sentiment for this AI ASIC leader. Jim Awad, Senior Managing Director of Clearstead Advisors, stated that while investors should prepare for stronger competition for NVIDIA Corporation in this field, given the rapid growth of the AI infrastructure market, the company can still sustain growth trends even if it loses some market share. However, future growth may continue to lag behind competitors like Broadcom Inc. With this ongoing decline, NVIDIA Corporation has dropped by about 10% from its peak in August, resulting in nearly $470 billion in evaporated market value. Despite this, it remains the world's largest company in terms of market capitalization. Microsoft Corporation follows with a market cap of $3.7 trillion. Daniel O'Regan, Managing Director of Stock Trading at SUSS securities, pointed out the relative lows NVIDIA Corporation reached in the past 18 months compared to Broadcom Inc., which is quite noticeable. He stated, "The word 'OpenAI' can certainly generate a lot of momentum, accelerating a trend: funds are increasingly favoring Broadcom Inc." He also noted that Broadcom Inc.'s stock performance has significantly outperformed that of NVIDIA Corporation this year. "Today's divergence between the two seems somewhat extreme, but NVIDIA Corporation has been synonymous with AI for about three years. While I don't think the market is cooling on it, funds are indeed expanding to other AI winners," O'Regan emphasized. "In contrast, Broadcom Inc. is a 'shiny new thing.'" On Wall Street, due to the skyrocketing demand for Broadcom Inc.'s Ethernet switch chips and AI ASIC chips, financial titans are generally bullish on Broadcom Inc.'s stock prospects, expecting Broadcom Inc. to continue setting new highs in its stock price performance. Therefore, following Broadcom Inc.'s earnings announcement, many have significantly raised their target stock price for the company for the next 12 months, with Susquehanna, Bernstein, KeyBanc, and Barclays raising their targets to $400 for Broadcom Inc. by the time of the Friday stock market closing, Broadcom Inc. gained nearly 10% to $334.89. The Rapidly Growing Wave of AI ASIC With its absolute technological leadership in chip-to-chip communication and high-speed data transfer, Broadcom Inc. has been the most important player in the field of AI ASIC custom chips in AI compute infrastructure in recent years. One of its projects is the TPU AI Accelerator Chip, developed in collaboration with Alphabet Inc. Class C, and Broadcom Inc. is a essential contributor to this project. In addition to chip design, Broadcom Inc. provides critical chip-to-chip communication intellectual property for Alphabet Inc. Class C and is responsible for manufacturing, testing, and packaging new chips, thereby supporting Alphabet Inc. Class C in broadening its new AI data center initiatives. As US tech giants continue to invest heavily in AI, the biggest winners are not only companies like NVIDIA Corporation, but also AI ASIC giants like Broadcom Inc., Marvell Technology, Inc., and the world's largest contract chipmaker from Taiwan, TSMC. Companies like Microsoft Corporation, Amazon.com, Inc., Alphabet Inc. Class C, Meta, and even the leading generative AI developers like OpenAI, all collaborate with Broadcom Inc. or other ASIC giants to update and iterate AI ASIC chips used for massive inferencing AI compute deployments. Therefore, the future market share expansion of AI ASIC is expected to be significantly superior to AI GPUs, trending towards share equality, instead of the current dominance of NVIDIA Corporation AI GPUs with a 90% market share. According to the latest predictions from JPMorgan Chase, this chip will utilize a 3nm advanced manufacturing process in collaboration with Broadcom Inc. and will begin mass production in the latter half of 2025. It is expected that the Ironwood chip will bring in approximately $10 billion in revenue for Broadcom Inc. over the next 6-7 months. The cost-effectiveness advantage of AI ASIC, especially for tech giants like Alphabet Inc. Class C, Microsoft Corporation, and OpenAI, is the biggest advantage over NVIDIA Corporation's AI GPUs. Additionally, the internal AI ASIC of Meta, the MTIA v2, under third-party GEMM/inference test models, consumes less energy compared to the NVIDIA Corporation H100 but with similar throughput (both are about 5.5-5.7 times that of the T4). If the H100 is estimated to cost over $30,000 and the expected cost of the MTIA v2 is $2,000-3,000, MTIA's performance-cost index (perf/$) is far stronger than NVIDIA Corporation. Therefore, while AI ASIC may not completely replace NVIDIA Corporation, its market share is bound to expand further, moving away from the current dominance of NVIDIA Corporation AI GPUs. Particularly in practical AI data center compute infrastructure configurations, a mixed architecture where AI ASICs handle routine workloads and GPUs handle exploratory peak workloads and new model development has been increasingly favored by tech giants to minimize the total cost of ownership. Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR epitomizes the concept of "classic, never out of date"! Bearing the intense demand for AI GPUs since 2023 and the recent explosive demand for AI ASICs, Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR cannot be overlooked. Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR is currently the world's largest contract chip manufacturer, dominating the majority of global chip outsourcing orders for decades with expertise in chip manufacturing technology and an advanced position in chip manufacturing technology innovation and improvement. Especially in the advanced processes of 5nm and below. More crucially, with its leading edge in 2.5D and 3D chiplet advanced packaging in the chip manufacturing field, Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR has secured almost all 5nm and below advanced chip packaging orders in the market, and its advanced packaging capacity is currently insufficient to meet demand. NVIDIA Corporation's Blackwell, which has been in production since the end of last year, is experiencing supply shortages mainly due to Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR's CoWoS packaging capacity at the 2.5D level. Currently, major chip giants like Apple Inc., AMD, NVIDIA Corporation, and Broadcom Inc. are transitioning to Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR's 3D level of advanced packaging capacity. This shift is expected to further drive Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR's advanced packaging capacity to become insufficient. Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR's latest performance shows a 61% increase in net profit in Q2 driven by the surging demand for AI compute. Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR expects its sales in 2025 to increase by around 30% when measured in US dollars, higher than the previous expectation of around "close to 20% middle range," mainly due to the continuous surge in AI chip orders using 3nm and 5nm advanced manufacturing processes. As the demand for AI compute remains incredibly strong, Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR is actively expanding its backend capacity to increase the actual production capacity of CoWoS advanced packaging, primarily for NVIDIA Corporation's AI GPU production, indicating the company's confidence in continuing high demand for AI chips until 2026.