A new long-term agreement between Broadcom Inc (NASDAQ:AVGO, XETRA:1YD) and Google is seen by UBS analysts as a meaningful boost to near-term confidence in the company’s artificial intelligence outlook, even as structural concerns about customer concentration and competition remain.
UBS said the deal, which extends through 2031 and includes future generations of Google’s tensor processing units (TPUs), has helped ease a central investor worry around a potential shift by Google toward alternative chip suppliers.
“To some degree, this addresses a key investor concern around Google’s potential COT transition,” UBS wrote, adding that most investors it spoke with had already expected Google to “rely heavily on [Broadcom] through this timeframe.”
Still, UBS stopped short of calling the development a turning point, instead framing it as incremental within a broader debate about long-term risk.
“We view these announcements incremental to the near-term TPU risk debate,” the analysts wrote, noting that attention was likely to remain on Broadcom’s ability to diversify beyond TPU-related revenue as competitors scale.
The firm pointed in particular to the continued ramp of rival suppliers, which could sustain concerns about customer concentration over time.
At the same time, UBS highlighted the expansion of Broadcom’s collaboration with Google and Anthropic as evidence of strengthening demand fundamentals. Anthropic was expected to gain access to around 3.5 gigawatts of TPU-based compute starting in 2027, contingent on business performance.
That shift was projected to lift Anthropic-related TPU orders to roughly $50 billion across 2026 and 2027, up from about $40 billion previously. UBS said this was “largely consistent” with its own forecast of approximately $53 billion over the period.
The analysts also raised their broader estimates, citing supply chain checks and improving visibility. They now expect Broadcom to ship around 7 million TPUs in 2027, up from a prior estimate of 6 million, and increased revenue forecasts to $195 billion for fiscal 2027 and $212 billion for calendar 2027.
AI-specific revenue projections were also lifted to $145 billion for fiscal 2027, compared with a prior estimate of $133 billion. UBS noted this figure was “substantially above company guidance,” but broadly in line with investor expectations.
Beyond Broadcom-specific impacts, UBS wrote that the agreement reinforced its view that demand for TPU capacity within Google Cloud Platform was accelerating. The firm raised its estimates for TPU-related spending to $26 billion in 2026, $61 billion in 2027 and $79 billion in 2028.
Anthropic’s own business update further supported that view, with the company reporting run-rate revenue above $30 billion, up sharply from about $9 billion at the end of 2025, alongside a doubling of high-value enterprise customers.
UBS maintained its $475 price target on Broadcom, adjusting valuation assumptions to reflect updated multiples across its software and semiconductor segments.
Shares of Broadcom traded hands at $378 on Monday afternoon.
