Broadcom (AVGO) shares gained over 1% on Tuesday after Morgan Stanley issued a bullish note dismissing fears that MediaTek will significantly erode its dominance in supplying Google’s tensor processing units (TPUs). Analyst Joseph Moore reiterated an Overweight rating and a $502 price target, calling the stock a core AI winner.
Moore acknowledged that MediaTek has a real opportunity, as Google seeks to manage costs and avoid over‑reliance on a single supplier. However, he expects Broadcom to retain approximately 80% of Google’s TPU business over the long term. He compared current concerns to last year’s Marvell/Alchip fears on Amazon’s Trainium chip, which proved overblown, and noted that MediaTek’s own stated target is just a 15–20% share.
Practical hurdles for MediaTek were also highlighted: it still lacks CoWoS packaging capacity for 2nm TPU production and hasn’t proven its EMIB packaging technology at the scale Google requires. Meanwhile, Broadcom has already locked in high‑bandwidth memory supply contracts, making it difficult for MediaTek to undercut on cost.
Morgan Stanley estimates Broadcom will generate around $120 billion in AI revenue in fiscal 2027, with TPUs contributing roughly $80 billion. Several new ASIC customers are expected to ramp in the second half of 2027, adding growth beyond the Google relationship. The note also highlighted a broader rotation from software to hardware after IBM warned of weaker Q2 results, as client spending shifts toward AI infrastructure buildouts.
Wall Street consensus on AVGO remains a Strong Buy, with 23 Buy ratings and an average price target of $513.29, implying about 32% upside. Moore ranked Broadcom as a close #2 behind NVIDIA among AI compute names.
