Broadcom CEO says generative AI will become a bigger part of global GDP

broadcom Chief Executive Officer Hock Tan told CNBC’s Jim Cramer on Monday that artificial intelligence could become a bigger part of global GDP as the technology becomes more widespread across industries.

Mr Tan said the current global GDP stands at around $110 trillion, of which 30% is “valued from related industries that are knowledge-based and technology-intensive”.

“And when you introduce generative AI, it creates intelligence in many other aspects of society,” Tan continued. “That 30% statement will increase to 40% of total GDP. That’s $10 trillion a year.”

If AI grows and becomes a bigger part of global GDP, as Tan predicts, it will be a boon for the nascent technology sector and all the industries that depend on it. Broadcom makes chips and networking equipment and has benefited greatly from the AI ​​boom as hyperscalers have acquired its products. The stock price is currently up 53.86%.

Broadcom and OpenAI announced an official partnership Monday to jointly build and deploy a 10 gigawatt custom artificial intelligence accelerator. The move is part of a broader effort to expand AI across industries. Broadcom stock soared on the news, rising 9.88% at market close.

Broadcom’s deal with OpenAI is the latest in a number of big-ticket alliances between major Big Tech companies related to AI.

Tan said OpenAI is “one of the few companies at the forefront of creating fundamental models,” noting that the ChatGPT maker is worth about $500 billion even as a private company. Tan said Broadcom’s “rigorous” approach to business allows the company to see “this phenomenon, this wave called generative AI” years into the future.

Broadcom is tight-lipped about its customers, but announced earlier this year that it was developing new AI chips with three major cloud customers. Management announced last month that it had secured a $10 billion chip order from a fourth, unnamed customer.

Tan told Kramer that Broadcom works closely with “about seven players,” and defined four of them as “actual customers,” or companies that “have given us large product orders.”

“We are very happy” about the partnership with Broadcom, Tan said. “Because these guys basically play this game, and ultimately they need a lot of computing power to win this game of creating the best foundational model in the world.”

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Disclaimer CNBC Investing Club Charitable Trust owns shares of Broadcom.