Analyst Note
Morgan Stanley reiterated an Overweight rating on Broadcom Inc (AVGO) on 14 July 2026, stating the company remains a core AI winner and a close #2 behind Nvidia. The firm expects Broadcom to generate roughly $120 billion in AI revenue in fiscal year 2027, of which about $80 billion is projected to come from its Tensor Processing Unit (TPU) related business. While Broadcom is projected to retain approximately 80 percent of Google's TPU share over time, Morgan Stanley considers the bearish forecasts of a 50 percent share or complete displacement by MediaTek as premature.
The analyst, Joseph Moore, acknowledged that MediaTek’s participation in the TPU supply chain is real but not disruptive, noting that cost‑saving opportunities for Google may be limited, especially concerning high‑bandwidth memory (HBM) where Broadcom already has secured supply under existing contracts. Execution risk was highlighted around MediaTek’s packaging strategy; the firm expects MediaTek to rely on CoWoS capacity for 2 nm TPU production, while its EMIB packaging technology remains unproven at the scale required by Google.
Morgan Stanley compared the current MediaTek discussion to last year’s Marvell/Alchip dynamics on Amazon’s Trainium chip, concluding that fears of full displacement have previously been overstated. The firm emphasized Broadcom’s leadership in custom ASICs, its strong networking franchise, diversification of AI revenue, and confidence in the management team to navigate product transitions.
Overall, Morgan Stanley views Broadcom as one of the best growth stories in semiconductors, maintaining its Overweight stance despite the MediaTek/TPU debate, and continues to regard the company as a core AI winner.