Broadcom's Crossroads: ARK Doubles Down on Custom AI Chips While RBC Waves Caution Flags

ARK adds Broadcom shares while RBC downgrades; Jalapeño AI chip and Q3 earnings on Sept 2 set the stage for a pivotal test.

The tug-of-war over Broadcom's near-term trajectory has rarely been this visible. Cathie Wood's ARK Investment added 57,705 shares of the chipmaker on Wednesday—the same day Nvidia delivered its blockbuster earnings—while RBC Capital simultaneously downgraded the stock, capturing the market's sharply divided view of the company just days before its fiscal third-quarter report.

Two Camps, One Stock

ARK's purchase, valued at roughly $20.5 million based on Wednesday's closing price of $355.59, was part of a broader portfolio shuffle. The fund manager also picked up positions in Cerebras and Cloudflare while shedding 37,977 AMD shares worth approximately $18.3 million. The message from ARK's corner is unambiguous: when it comes to custom silicon for artificial intelligence, Broadcom is the preferred bet over AMD.

Lynch Asset Management appears to share that conviction. The firm built a fresh position of 19,700 shares—around $7.44 million—representing roughly 2% of its total portfolio. Both moves land during a stretch when the stock has been regaining investor attention following the pullback triggered by the Marvell-Google deal.

RBC Capital sees things differently. The bank lowered its rating to "Sector Perform" with a hold recommendation, citing negative technical signals. RBC's analysts project a potential decline of roughly 6.6% over the next three months, with a 90% probability range spanning $318.81 to $422.05.

The Jalapeño Factor

The optimism surrounding Broadcom's custom-chip business draws fuel from a parallel development: the "Jalapeño" AI processor co-developed with OpenAI. According to SemiAnalysis benchmarks, the chip outperforms Nvidia's current Blackwell generation on inference efficiency. In tests using the DeepSeek-R1 model, Jalapeño reportedly achieved up to 700 tokens per second versus 169 for the comparable solution.

The chip's development cycle spanned nine months, with a small-batch production run slated for late 2026 and mass manufacturing expected in 2027. The Yole Group views this as a potential threat to Nvidia's inference margins, though analysts caution against framing it as an "Nvidia killer."

Technical Picture Remains Bruised

Despite Thursday's bounce—the stock advanced 2.2% to €312.05 in German trading, following Wednesday's close of €305.25—the broader technical landscape still looks damaged. The shares remain roughly a quarter below their 52-week high of $429.60, with a 28% gap separating the current price from that peak. The distance to the 50-day moving average of €336.17 stands at 8%, while the 200-day average is now just 2.1% away—evidence of how far the recent slide has pulled the stock back toward its medium-term trendline.

The relative strength index sits at 38.2, suggesting the stock has been oversold rather than overbought, which could provide fuel for a technical rebound. Over the past 30 days, the shares have still lost 6.8%, and the 42% volatility reading on a 30-day basis underscores just how jittery trading in the name has become.

What's Next

The real test arrives September 2, when Broadcom reports its fiscal third-quarter results. Consensus estimates call for adjusted earnings per share between $3.21 and $3.24 on revenue of roughly $29.4 billion.

The planned financing of up to $100 billion through an off-balance-sheet special purpose vehicle to expand AI chip infrastructure remains a background consideration, though it's likely to move into sharper focus once earnings are out.

Adding to the week's intensity, Broadcom's VMware Explore conference runs from August 31 through September 3 in Las Vegas, with the company highlighting private AI cloud infrastructure scaling and updates to VMware Cloud Foundation. The near-perfect overlap with the earnings date means investors face a concentrated information window.

For now, Thursday's recovery appears to be a reaction to Nvidia's strong results and outlook rather than any company-specific catalyst. Whether the rebound has staying power—and which side of the ARK-RBC divide proves closer to the mark—likely won't become clear until Broadcom delivers its own numbers.