Investing.com — Morgan Stanley reiterated an Overweight rating on Broadcom in a note on Tuesday, pushing back on investor concerns that MediaTek could significantly erode Broadcom’s share of Google’s TPU business.
Analyst Joseph Moore told investors that Morgan Stanley expects Broadcom to retain roughly 80% TPU share over time, calling bearish forecasts of 50% share or eventual displacement “premature.”
The firm said “MediaTek participation is real, but not disruptive,” comparing the debate to last year’s Marvell/Alchip dynamic on Amazon’s Trainium chip, where fears of full displacement also proved overstated.
While acknowledging MediaTek has a credible opportunity given Google’s cost consciousness and desire for supplier optionality, Morgan Stanley said potential cost savings could be difficult to realize, particularly around HBM memory, since Broadcom has already secured supply under existing contracts.
The firm also flagged execution risk around MediaTek’s packaging strategy, noting its Taiwan semiconductor team still expects MediaTek to rely on CoWoS capacity for 2nm TPU production, with EMIB packaging technology remaining unproven at the scale Google requires.
Morgan Stanley estimated Broadcom will generate roughly $120 billion in AI revenue in fiscal 2027, with TPU-related revenue around $80 billion, though it expects TPU’s share of total AI revenue to decline to about 60% as newer ASIC customers ramp.
“AVGO remains one of our preferred AI compute names and a close #2 behind NVIDIA,” Morgan Stanley said. “We view Broadcom as one of the best growth stories in semis, supported by its leadership in custom ASICs, strong networking franchise, increasing AI revenue diversification, and a management team we trust to execute through product transitions.
“While the MediaTek / TPU debate is a real overhang, we think the market is overstating the risk to Broadcom’s growth trajectory and view AVGO as a core AI winner.”
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