Could Broadcom (AVGO) Become the Biggest Winner From the Shift to Custom AI Chips?

Could Broadcom (AVGO) Become the Biggest Winner From the Shift to Custom AI Chips? Soumya Eswaran Wed, August 5, 2026 at 3:30 PM GMT+2 3 min read AVGO Emerald Wealth Partners, an independent asset and wealth management firm based in Zurich, released its Q2 2026 investor letter for the "Focused Equity Strategy. " A copy of the letter can be downloaded here .

The Strategy reported a 0. 8% gross return for the second quarter of 2026. Equity markets rallied after the first quarter's Iran shock faded and oil prices reversed their spike, but the advance remained narrow and concentrated in cyclical semiconductor and memory stocks benefiting from supply constraints.

The letter warned that investors were treating peak-cycle earnings as durable, while FOMO, IPO demand, and a US cyclically adjusted P/E ratio near 40 pointed to late-cycle market behavior. Long-term fundamentals are currently undervalued by the market, leading to underperformance in the strategy, notably due to the portfolio's avoidance of low-quality momentum-driven semiconductor stocks, which boosted the benchmark this quarter. It remains focused on enterprise infrastructure, digital platforms, custom silicon, and networking businesses that hold customer relationships, workflow data, distribution, and efficiency advantages, which could allow them to monetize AI rather than be displaced by it.

Please review the Strategy's top five holdings for its key selections. In its second-quarter 2026 investor letter, Emerald Wealth Partners Focused Equity Strategy highlighted Broadcom Inc. (NASDAQ: AVGO ).

Broadcom Inc. (NASDAQ:AVGO), a leading American company that designs and develops various semiconductor devices and infrastructure software solutions, contributed 64 bps to the strategy's performance during the quarter. On August 4, 2026, Broadcom Inc.

(NASDAQ:AVGO) closed at $418. 16 per share. One-month return of Broadcom Inc.

(NASDAQ:AVGO) was 7. 58% and its shares gained 38. 62% over the past 52 weeks.

Broadcom Inc. (NASDAQ:AVGO) has a market capitalization of $1. 99 trillion.

Emerald Wealth Partners Focused Equity Strategy stated the following regarding Broadcom Inc. (NASDAQ:AVGO) in its Q2 2026 investor letter: " Broadcom Inc.   (NASDAQ:AVGO) added 64 bps, its 22.

3% share price climb helped by the news OpenAI has selected the company to design its custom inference chip. Broadcom is the dominant designer of custom AI silicon: it has long co-designed Google's Tensor Processing Units, which power Gemini and some of Anthropic's inference capacity through Google Cloud. Few companies possess the engineering depth to develop bespoke accelerators at hyperscale.

AI spending is shifting from training models to running them, where custom chips deliver materially better performance per watt and a lower cost per token than Nvidia's general purpose GPUs. Under Hock Tan, one of the industry's ablest capital allocators, the company has assembled two further pillars that sit at the center of the AI buildout: It dominates the Ethernet switching silicon that interconnects AI clusters — content that grows with cluster size, whether those clusters run on Nvidia GPUs or custom chips. Through VMware, it supplies the virtualization layer enterprises need to run AI workloads alongside their legacy applications.

We added to the position on the back of the OpenAI announcement, and as the stock consolidated off its highs. " Story Continues Broadcom (AVGO) - Among Billionaire Ken Fisher’s Top 11 Dividend Stock Picks Broadcom Inc. (NASDAQ:AVGO) ranks 8 on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026 .

 According to our database, 173 hedge fund portfolios held Broadcom Inc. (NASDAQ:AVGO) at the end of the first quarter, compared to 202 in the previous quarter.  While we acknowledge the potential of Broadcom Inc.

(NASDAQ:AVGO) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the  best short-term AI stock . In another article , we covered Broadcom Inc.

(NASDAQ:AVGO) and shared the list of stocks Jim Cramer discussed. In addition, please check out our hedge fund investor letters Q2 2026 page for more investor letters from hedge funds and other leading investors. READ NEXT: 33 Stocks That Should Double in 3 Years and 15 Stocks That Will Make You Rich in 10 Years .

Disclosure: None. This article is originally published at Insider Monkey .