Ishika Kumar, Pune
In the tech sector, Broadcom, the global semiconductor market leader, has replaced Tesla as one of the ‘Magnificent 7’, the elite group of seven US companies which dominate the stock market by market capitalisation. Tesla, the market leader in electric vehicles (EVs) and innovating energy solutions, saw a drop in its market value. This helped Broadcom to gain its position which predominantly deals in AI expertise and cloud infrastructure technology.
With analysts monitoring the acquisitions and the growth of Broadcom’s influence in the semiconductor sector, the company’s growth didn’t come as a surprise. VMware, the cloud computing giant, had recently acquired Broadcom for $69 billion, leading to increasing the software capability of the company while giving a significant boost to Broadcom’s top line. VMware’s acquisition of Broadcom helped its strategy of expanding its portfolio through acquisitions, including CA Technologies in 2018. This step has helped the company to diversify its revenue streams.
Due to the decrease in market value by 22% in 2024, Tesla saw its exit from the Magnificent 7, which also includes other tech giants such as Apple, Amazon, Microsoft and Nvidia. While Tesla has maintained its dominance in the world of electric vehicles despite competition from other automobile makers and new entrants. As the global landscape is changing with the rapid growth of artificial intelligence(AI), 5G and cloud computing, the semiconductor market has also been on the rise of market demand complimenting the market growth, which Broadcom was able to capitalize on. It helped Broadcom to cross the market value of $803 billion
Broadcom was able to steer the company to these opportunities under the leadership of CEO Hock Tan. Under his guidance, Broadcom became a market leader in the supply of semiconductors to some of the world’s largest tech companies. Apart from the success of the company holistically, Tan’s leadership helped especially the semiconductor department to grow which is responsible for the majority of the company’s revenue along with its software ventures which also thrived.
The removal of Tesla from the magnificent 7 marks a pivotal moment in the Tech world. Despite it being a market leader in the EV sector, this transition to Broadcom highlights the rapid change of the tech landscape globally towards AI and cloud computing and the need to sustain and innovate with this change.