Apple’s New AI Chip Partnership Just Became Nvidia’s Worst Nightmare

Remember when Apple teased us with “Apple Intelligence,” trying to resurrect Steve Jobs’ charisma while we all pretended not to roll our eyes? Turns out, they weren’t kidding (for once). Apple’s been slathering generative AI onto its devices like chocolate lovers slather nutella on everything in their kitchen. And now, they’ve stirred up the tech world again by picking a new BFF in the chip-making game.

Despite buying search-driven chips from Amazon Web Services (AWS) earlier this month, Apple decided to take its server chip development elsewhere. Enter Broadcom (AVGO), the semiconductor guru now tasked with making Apple’s new toy, code-named Baltra.

Broadcom isn’t exactly new to Apple’s Rolodex. The two have been cozy since a 2023 multibillion-dollar deal for 5G radio frequency components. But this time, they’re cooking up something way spicier: AI server chips, code-named Baltra, set to hit mass production by 2026. These chips are designed to handle Apple’s growing generative AI ambitions, including large-scale machine learning and real-time natural language processing (basically more tech to help Siri go from “mildly annoying” to “marginally useful.”)

Oh, and Broadcom’s stock? It popped 7.5% on the news, while Apple’s shares hit a fresh high before settling down. Wall Street seems to love this pairing… almost as much as Broadcom’s 68% stock surge over the past year.

This is clearly a strategic play against Nvidia (NVDA), the current king of AI processors. Nvidia’s high-priced GPUs dominate the market, but Apple’s Baltra chips could lower the industry’s dependence on them, cutting through Nvidia’s market share like a hot knife through butter. Doug Clinton, CEO of Intelligent Alpha, said it best: “Any big AI player has to develop their own silicon. Apple’s move into server chips shows they’re dead serious about AI.”

And Apple’s no stranger to shaking up the semiconductor world. Remember when they ditched Intel in 2020 and started using their own M1 chips for MacBooks? That decision rewrote the playbook, and Baltra could be their next chapter in chip innovation. If Apple nails this project, it won’t just be a win for them. Broadcom stands to become Silicon Valley’s new darling, cashing in on its role as Apple’s chip whisperer. Nvidia, on the other hand, might want to start brainstorming a new strategy… or at least rehearse a gracious “we’re not worried” press release.

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Stock.News has positions in Apple, Amazon, and Intel.