[Music] from the Golden Gate to Fisherman's Warf San Francisco is buzzing for AI this stock must stay ahead of the trend from Cloud to custom AI Tech is broadcom poised to outrun the competition into the Future Boy do we have a treat tonight broadcom the 766 billion doll semiconductor an AI infrastructure company has been a real wild Trader over the last couple weeks when broadcom reporter September 5th even though the results I thought were terrific their AI revenues came in a tiny bit light versus expectations so the stock ridiculously plunged more than 10% the next
day everyone pointed to this is still one more sign that the AI infrastructure story was dead then last week we got some very bullish commentary from oracles Larry Ellison invidious Jenson Wong turned out the whole group turned broadcom finished the week up 22% and it's up nicely as people realize how strong the quarter really was can it keep running let's take a close look with Haw tan the legendary president C Mr Tam welcome back to B money thank you Jim great to be here well Haw the last time we saw you was before the VMware
deal closed that was a Monumental deal and it is really starting to work out maybe you can give us kind of a reintroduction to broadcom sure well broadcom has been around for I've been running the ship for over 18 years started as a Semiconductor Company and over the last six years we kind of uh moved into infrastructure software and that has gone very well and the recent acquisition of VM was essentially another step towards the direction of creating a very balanced mix between semiconductors particularly focusing on Enterprises and infrastructure software again very much for Enterprises
well let's talk about the VMware acquisition it turned out some people were concerned about it uh about how it was performing the execution as always CU it's a hawk Tan Company was superb but this was a breakout quarter how come no it was a jewel the the technology and the products and the engineering team which created the products the core technology been around over 20 years it's great great technology and it's very very critical for infrastructure especially for large Enterprises running in application on your data centers on Prem that's what VM is all about and
what we've done is improved the products make it much more usable from just being compute virtualization to basically creating a virtualization of entire data center on Prem in Enterprises and basically creating the same Cloud experience privately on Prem well you're the only one which is one of the reasons why I love the business so much let's talk about the ever growing AI opportunity at the beginning of your Hawk you were talking about AI Revenue at 7.5 billion then you Revis that to 10 billion in March this time you raised it 11 billion in June and
now it looks like 12 billion how can this be growing so quickly it is because is we are in a segment of the market in AI where we are addressing several hyperscalers and this hyperscalers has very strong incentive ambition towards build continually investing in large language models to basically create models that are smarter and smarter and uh eventually embed into their huge large subscriber based platform and they have to keep investing and they are really investing they're not just proving it out and one of the things that drives them towards a direct as they invest
is they want to create their own uh what call accelerators they call it xus we are right in the Forefront of enabling this this few hyperscalers invest and essentially uh start building up these large AI clusters of xus and this is a road map over the next 3 to 5 years this not a one-year phenomenon as we see it it's a journey for these guys but it's a very urgent journey and it's a huge opportunity I'm glad you talk about it being a longer term because some of the analysts were caught up with the idea
that maybe it's slowing perhaps because they didn't realize that one or two one customer may have uh asking for a little more customization because this stuff is really uh dependent upon you they can't just go it's not a commodity what you're doing but the idea that it could be slowing seemed to be completely fanciful far from it actually as I said this is a very focused and it's a longterm it's a midterm plan three to five years I consider M could be long we see that road map over the next for the for this hypers
scalers over the next three to five years and their intention is to build out these large clusters because what is needed to drive those large language models those Foundation models owned by this hyperscalers into you know into Improvement the higher performance in what they call higher IQ of the of their model seriously over the next 5 years is to keep coming out with a new generation each new generation llm requires multiple acts two three acts maybe more of compute each time each year so you can imagine that's a driver towards a larger and larger Compu
opportunity which is going to be taken up largely by xpu I'm so glad you put it that way so many people are saying one and done that's the false narrative the Nar you just laid out as the one that's going to keep broadcom going now I had been concerned about the non AI Hardware Wireless Revenue some what I guess you could call Legacy on this quarter you said Not only would there be green shoots but you actually called a bottom now you hadn't called a bottom before so I know this is a serious thing that
you did you really believe that the that the so-called Legacy is turning absolutely and the best we reach bottom about couple quarters go early part of fiscal 20 24 and we have since seen seen sequential growth of our revenue from that bottom which was about our Q2 fiscal 24 and and what supporting it is our bookings since that quarter had been growing 20% year on year and what we see is a clear uh upt and a a clear up cycle of semiconductor industry because as you know Jim this is an industry that's very cyclical always
very cyclical now that cyclicality had slowed down over the last 10 years because the grow semiconductors has slowed down to me single digit covid-19 20 uh 2122 drove up Demand on for semiconductors because the way we consume technology the way we want to work remotely change it happen so there's a big Up Cycle 2122 we're just suffering TP a typical hangover from the up cycle and that downturn was late 23 and 24 but I think we have hit the bottom and we're on a well one way to recovery and 25 26 will be an upcycle
for non AI semiconductors okay so I want to drill down on that wireless Revenue increased just 1% this quarter uh you storage connectivity sales fell 25 Broadband Sal Sals 40 9 Industrial Sales fell 31 you were telling me that these are markets that next year could be doing much better absolutely really we believe that yes because we already seeing especially server storage tied to networking non air related and these are largely Enterprise based Demand right we seeing sequential growth strong sequential growth from the bottom of Q2 this year even though it's still what you express
is year on-year decline but sequentially it's going up well that's what matters I just want to go right back again just to uh the opportunity you have in AI people have to realize that the opportunity is so great but you really are focused on the on the big dogs because that's where the that's where the money is I mean if it was all in the Enterprise hwam would go all Enterprise correct yes this is a big dog this is a market segment XP use for accelerators and the networking these are the guys who are investing
in today 100,000 GPU or xpu clusters in 4 years time they're headed towards a million and you're you're you're part of the pluming of every part of this right we are engaged in every with everyone well that's why your stock I think is way too cheap and you know I have to say full disclosure my club has a very big position in it why because because you're hucked him and we know what that means it means that you are good for what you promise always thank you thank you for saying that oh cuz it's true
that's Hawk T vom's president and CEO simple abgo thank you hawk thank you good to see my back for the break coming up this sector has been making investors frown can this Cosmetics player innovate a beautiful solution stick with Kramer don't miss a second of Mad Money follow @ Jim Kramer on X have a question tweet CR # mad mentions send Jim an email to madmoney cnbc.com or give us a call at 18743 CNBC miss something head to madm money. cnbc.com
