This article first appeared on GuruFocus.
Custom AI processors are gaining ground as large technology companies look beyond Nvidia’s graphics chips and toward hardware built for specific models and workloads. Alphabet (NASDAQ:GOOGL) has pushed its Tensor Processing Unit for Gemini, while OpenAI and Anthropic are also leaning into specialized silicon.
Broadcom (NASDAQ:AVGO) is emerging as a central supplier in that shift. The chip designer has worked on Google’s TPU across seven generations and has a multiyear partnership with OpenAI to help develop 10 gigawatts of custom AI accelerators. The company also expects AI chip revenue to reach $100 billion by the end of 2027.
Broadcom said its 2025 net revenue rose 24% to $63.8 billion, while diluted earnings per share climbed 40% to $6.82. The shares fell nearly 3%.
Taiwan Semiconductor Manufacturing (NYSE:TSM) stands on the production side of the boom. The foundry makes chips for Broadcom and many other semiconductor names, and it held a 72% share of the global pure-play foundry market. Revenue for 2025 increased 35.9% to $122.42 billion, while diluted EPS rose 46.4%.
Wall Street rates both stocks as Buy. TSMC, in my opinion, has the edge of the full spectrum since it is in the heart of the semiconductor supply chain as the global leader chip manufacturer, making sophisticated chips for most of the biggest designers in the industry.
