Morgan Stanley: Broadcom to Dominate 80% of Google's TPU Market Long-Term

Morgan Stanley (MS) analyst Joseph Moore has strongly defended semiconductor giant Broadcom (AVGO-US) in his latest research report, reiterating an 'Overweight' rating and a $502 price target.

The report emphasizes that Broadcom is a core winner in the artificial intelligence (AI) wave, second only to NVIDIA (NVDA-US), and predicts it will long-term dominate approximately 80% of Google's (GOOGL-US) TPU market share.

Addressing recent market concerns that MediaTek (2454-TW) might erode Broadcom's share in Google's custom chip business, Morgan Stanley considers these worries 'premature' and 'overdone.' While MediaTek is indeed involved in Google's 3-nanometer TPU design project, and Google does have a motive to diversify suppliers to reduce costs, Morgan Stanley notes that MediaTek's involvement, while 'real,' is 'not disruptive.'

The report analyzes that MediaTek still faces challenges in advanced packaging (such as CoWoS) and production scale, whereas Broadcom has solidified its competitive advantage through secured high-bandwidth memory (HBM) supply contracts, superior packaging capabilities, and massive production scale. MediaTek's own long-term market share target is only set at 15% to 20%, aligning with Morgan Stanley's expectation that Broadcom will retain 80% of the market.

On financial forecasts, Morgan Stanley expresses strong confidence, projecting Broadcom's AI-related revenue to reach approximately $120 billion by fiscal year 2027. Of this, TPU-related business is expected to contribute $80 billion.

With multiple new custom ASIC customers expected to ramp up volume production in the second half of 2027, although TPU's share of total AI revenue may decline to 60%, this reflects Broadcom's success in customer diversification, including deep collaborations with Meta, Apple, and Anthropic.

Despite Broadcom's stock performance lagging behind the semiconductor sector index (SOXX-US) since 2026 and pulling back about 19% to 22% from its June all-time high, Morgan Stanley believes this performance does not match its strong AI growth trajectory.

Morgan Stanley concludes that Broadcom possesses leading ASIC technology, strong networking expertise, and a trustworthy management team, making it one of the most attractive growth stories in the semiconductor industry today.