TLDRBroadcom launched the Thor Ultra networking chip on Tuesday to compete with Nvidia in AI computing infrastructureThe chip enables data centers to connect hundreds of thousands of processors for large AI model operationsBroadcom announced a deal Monday to supply $10 billion worth of custom chips to OpenAI starting in late 2026The company reported $12.2 billion in AI revenue for fiscal 2024 and targets a $60-90 billion market by 2027Bernstein maintained an Outperform rating on Broadcom stock with a $400 price target based on AI growth potentialBroadcom released its Thor Ultra networking chip Tuesday. The new processor aims to help data centers build larger AI computing systems. ππππ ππ: Broadcom (AVGO) to launch Thor Ultra AI Networking Chip – $AVGO $NVDA Broadcom Is Launching a New Networking Chip on Tuesday That Will Help Companies Build Artificial Intelligence Computing Systems by Stringing Together Hundreds of Thousands of Chips Thatβ¦ pic.twitter.com/dpMcHkqqwb— Hardik Shah (@AIStockSavvy) October 14, 2025The chip lets operators connect far more processors than previous versions allowed. This capability is crucial for running the large language models that power applications like ChatGPT.Thor Ultra directly competes with Nvidia’s networking interface chips. The release comes as Broadcom pushes to expand its presence in AI data center infrastructure.Broadcom Inc. (AVGO)The timing follows Monday’s announcement of a major OpenAI partnership. Broadcom will supply 10 gigawatts of custom chips to the ChatGPT maker starting in the second half of 2026.CEO Hock Tan outlined the company’s AI ambitions late last year. He said Broadcom is targeting a $60 billion to $90 billion market by 2027.That market includes both networking chips and custom data center processors. The company builds these chips for clients including Alphabet’s Google and OpenAI.Building Bigger AI ClustersBroadcom reported $12.2 billion in AI revenue for fiscal 2024. In September, the company added another unnamed $10 billion customer for its custom AI chips.The Thor Ultra serves as a critical connection point in AI systems. It links computing clusters to the broader data center infrastructure.“In the distributed computing system, network plays an extremely important role in building these large clusters,” said Ram Velaga, a Broadcom senior vice president. He acknowledged that GPU makers want to participate in the networking space.Engineers doubled the bandwidth on Thor Ultra compared to the previous version. The chip underwent extensive testing from early production stages.The development process involves multiple teams. Engineers work with hardware specialists to determine packaging, power requirements, and heat output.Design Focus Over Hardware SalesBroadcom doesn’t sell complete servers. Instead, it provides reference designs to customers.These designs help clients build networking infrastructure around Broadcom’s chips. The approach leverages partner investments in the ecosystem.“For every dollar we invest in our silicon, there is at least $6 to $10 that our ecosystem partners are investing,” Velaga said. The company focuses on creating production-ready designs.Bernstein analyst Stacy Rasgon reiterated an Outperform rating on the stock Tuesday. The firm set a $400 price target.Rasgon expects positive earnings revisions driven by AI revenue growth. He noted that current revenue estimates appear too conservative.The analyst addressed investor concerns about profit margins. While AI expansion might pressure margins somewhat, Rasgon doesn’t expect them to “plummet.”Broadcom maintains gross profit margins of 77.19 percent. The company has a market capitalization of $1.68 trillion and posted 28 percent year-over-year revenue growth.The stock closed at $356.70 on October 13, up 9.88 percent. Pre-market trading showed the price at $347.30 on October 14.The post Broadcom (AVGO) Stock Rises as New Thor Ultra Chip Takes Aim at Nvidia appeared first on Blockonomi.