Before the earnings report, Broadcom announced a "breakthrough" data center switch chip, and its stock price reached an all-time high

Broadcom suddenly launched "breakthrough" data center switch chips on the eve of its earnings report, with stock prices hitting an all-time high.

On June 3rd, while everyone was waiting for Broadcom's earnings report, the chip giant announced the start of shipments for its latest data center switch chip, Tomahawk 6, claiming its Ethernet switching capacity reaches 102.4 terabits per second, which is double the bandwidth of any Ethernet switch currently on the market. This chip is designed specifically for the demands of data centers running AI processor clusters.

Ram Velaga, Senior Vice President and General Manager of Broadcom's core switching business, emphasized in a press release:

Tomahawk 6 is not just an upgrade—it is a breakthrough. It marks a turning point in AI infrastructure design, combining maximum bandwidth, power efficiency, and adaptive routing capabilities into a single platform.

According to media reports, the chip is manufactured using TSMC's 3-nanometer process, achieving a process upgrade compared to the previous generation Tomahawk 5's 5-nanometer process. Broadcom highlighted that the direct benefit of doubling the bandwidth is the reduction in the number of network devices required by the system, thereby lowering power consumption and improving reliability.

Additionally, Tomahawk 6 is built on open standards. This means customers will not be locked into proprietary networking switch technologies, such as those promoted by NVIDIA. This directly targets the vulnerabilities of NVIDIA's closed ecosystem.

Releasing "breakthrough" product news 48 hours before the earnings report, Broadcom's stock price rose nearly 3.3%, breaking through last December's historical high, with a market capitalization approaching $1.2 trillion for the first time.

Wall Street's Consensus Bullish Prelude to Earnings

In the past week, at least six Wall Street firms have raised their target prices for Broadcom ahead of its second-quarter earnings report scheduled for Thursday evening.

Citigroup analyst Christopher Danely reiterated a buy rating on Broadcom stock on Monday, raising the target price from $210 to $276.

Danely stated in a client report that he expects Broadcom to report results above market consensus, driven primarily by the continued strong performance of its AI business. He anticipates that AI could account for about 30% of Broadcom's revenue this year.

Cantor Fitzgerald analysts also predict that Broadcom will deliver a report of "better than expected and raise guidance." They are particularly focused on the recent demand for custom silicon chips and the capacity ramp-up of Google's next-generation TPU v6 and the upcoming v7p.

While NVIDIA dominates the AI chip market, Broadcom and Marvell Technology are gaining attention by providing custom silicon solutions to large tech clients.

Seaport analyst Jay Goldberg pointed out that despite concerns about Marvell's competitive position in custom ASICs, the company's business growth last quarter outpaced NVIDIA, which is a positive signal for Broadcom Melius Research analysts stated in last week's report that Broadcom remains one of the "must-hold" AI stocks, as a leader in the fabless chip supply for areas such as networking. The company's switching business accounts for about 30% of its total AI revenue, which is expected to grow in the coming years as the company expands its AI chip portfolio