To The Moon

According to reports, the president of Broadcom Semiconductor Solutions Group officially clarified that OpenAI is not the mysterious tens of billions of dollars customer announced in its September financial report. Although Broadcom and OpenAI have indeed reached a cooperation to jointly build a customized AI accelerator, the project is expected to be completed in 2029, but this is not the previously rumored tens of billions of orders. With the exclusion of OpenAI, the market's speculation about the identity of Broadcom's mysterious tens of billions of customers has resumed.

The official announcement of tens of billions of customers is not OpenAI, the market is interested in$Broadcom (AVGO) $Speculation about the identity of this mysterious customer will start again.

On October 13, according to CNBC, Charlie Kawwas, president of Broadcom Semiconductor Solutions Group, made it clear that OpenAI is not the mysterious tens of billions of dollars customer announced in the company's September earnings conference call.This clarification put an end to the previous speculation in the market, and at the same time triggered a new round of investors' attention to Broadcom's identity as a real big customer.

Broadcom and OpenAI officially announced a cooperation plan on the 13th local time to jointly build and deploy a 10-gigawatt customized artificial intelligence accelerator. While sharing the stage with OpenAI President Greg Brockman on CNBC, Kawwas said:

"I'd be happy to get a $10 billion order from my good friend Greg, but he stillDidn't give me the purchase order。"

Analysts had generally expected OpenAI to be Broadcom's new tens of billions of dollars partner, but after the official cooperation plan was announced, this speculation was directly denied.

With OpenAI being excluded from the list of tens of billions of dollars of customers, market speculation about the identity of this mysterious customer will resume.Considering the current surge in demand for AI chips and Broadcom's leading position in the field of custom chips, the customer identity behind this large order will remain the focus of investors' attention.

On September 4, local time, Broadcom President and CEO Hock Tan said on an earnings conference call that the company has transformed a potential customer into an official fourth customized AI accelerator (XPU) customer and received a production order worth more than $10 billion. At that time, people familiar with the matter confirmed to the media that this mysterious new customer was OpenAI.

CNBC reports that Broadcom does not disclose the specific identities of large network-scale customers, but analysts generally agree that GoogleMetaAnd TikTok parent company ByteDance are its three largest customers.

The partnership between Broadcom and OpenAI has lasted for 18 months. The two parties will begin deploying custom-designed chip racks at the end of next year, and the entire project is expected to be completed in 2029.

Brockman, president of OpenAI, said that by building its own chips, companies are able to embed lessons learned from creating cutting-edge models and products directly into hardware, thereby unlocking new levels of capabilities and intelligence.

For investors who hold a bearish view on Broadcom's short-term surge, they can consider the bear market bullish spread.

What is a Bear Call Spread Strategy?

A bear call spread is an options strategy in which options traders expect the price of the underlying asset to fall in the coming period, the trader wants to short the underlying and wants to limit trading to a certain risk range.

Specifically, the bear market call spread is achieved by buying a call option at a specific strike price while selling the same number of call options with the same expiration date at a lower strike price.

Specific cases of shorting Broadcom

Take shorting Broadcom as an example. The current price of Broadcom is $356.7. Assuming that investors expect it to fall to around 300 on November 14, investors can use the bear market spread strategy to short Broadcom at this time.

Step 1: Sell the call option with an exercise price of 300 expiring on November 14 and get a $6,200 premium.

Step 2: Buy a call option with the same expiration date and an exercise price of 370, which costs $1,500 premium, and the bear market spread is established.

1. Sell a call option with a strike price of 300:

• Premium Revenue: $6,200.

• Obligation to sell call options: If the Broadcom price is higher than $300 on the expiration date, investors need to sell the underlying stock at a price of $300, facing potential losses.

2. Buy a call option with a strike price of 370:

• Premium expenditure: $1,500.

• The right to buy a call option: If the price of Broadcom rises by more than $370, investors can exercise this right, thereby limiting losses.

Net cash flow:

• Premium Revenue: $6,200

• Premium expenditure: $1,500

• Total premium Net Revenue: $4,700

Profit and loss analysis:

1. Maximum profit:

• When the Broadcom price is less than or equal to $300 on the expiration date:

  • Neither option is exercised, and the investor receives the full net premium gain.

  • Maximum profit = $4,700.

2. Maximum loss:

• When the Broadcom price is above $370 on the expiration date:

  • The 300 call option sold was exercised (loss $370-$300 = $70/share).

  • The purchased 370 call option is exercised, hedging part of the loss.

  • Total loss = $70 × 100-$4,700 = $2,300.

  • Maximum loss = $2,300.

3. Break-even point:

• Breakeven Price = 300 + ($4,700 ÷ 100) =$347。

• When the price is higher than $347, it starts to lose money, and when it is lower than $347, it is a profit.

Strategy Summary:

• Applicable scenarios:It is applicable to situations where investors expect the underlying price to fall or remain within a certain range.

• Advantages:By constructing a spread portfolio, you can lock in the maximum loss and maximum profit, and reduce margin occupation.

• Risk Control:Both the benefits and risks are limited, and the greatest risk occurs when the price of Broadcom rises sharply by more than $370. If investors believe that Broadcom will fall or trade sideways in the short term, this strategy can maximize returns under controllable risks.