JPMorgan Stands by Sky-High Broadcom Target as Shares Slide

Key Points

• Broadcom’s sell-off has centered on concerns that Alphabet could diversify more of its TPU work beyond Broadcom.
• JPMorgan’s bullish view pushes back on those fears, arguing that Broadcom remains well-positioned in Google’s future TPU generations.
• Broadcom’s AI semiconductor revenue continues to grow rapidly, giving bulls a fundamental counterpoint to the recent stock weakness.

Semiconductor giant Broadcom NASDAQ: AVGO experienced a dramatic drop-off since its last earnings report. Just days prior to the release, Broadcom traded at its all-time high near $480. However, the company failed to meet the extremely high expectations implied by its valuation, and shares tanked almost 20% in the following two days.

Amid this, one Wall Street firm coming to Broadcom’s defense is JPMorgan Chase & Co. The bank and its analyst, Harlan Sur, have a $580 price target on Broadcom. This is among the highest on Wall Street and far exceeds the MarketBeat consensus target near $493.

Notably, Sur recently reiterated his highly bullish target on Broadcom. Sur also provided key commentary for his rationale that paints a very positive picture of Broadcom’s relationship with its most important customer.

Broadcom and Alphabet: The Hot Button TPU Debate

One of the concerns coming out of Broadcom’s last earnings call was the future of its relationship with Google parent company Alphabet NASDAQ: GOOGL. Alphabet is widely believed to be Broadcom’s largest custom artificial intelligence (AI) chip customer.

The two firms have collaborated on multiple generations of Alphabet’s tensor processing units (TPUs) for several years. This is a core partnership that has helped Broadcom become the world’s second-largest semiconductor company, only behind NVIDIA NASDAQ: NVDA. Thus, when thinking about Broadcom’s outlook, investors are keenly aware of anything that points to volatility in its relationship with Alphabet.

In this context, a quote from Broadcom CEO Hock Tan from the company’s last earnings call was somewhat troubling. Tan noted, “Given the growth of consumption and development and consumption of AI compute, even by our partner, Google, that we fully expect that there will be some diversity of sources for them.” In other words, Google’s TPU program is becoming so large that Broadcom does not expect to be the only partner involved with it going forward.

Notably, industry analysts believe that the Taiwanese company MediaTek OTCMKTS: MDTKF is also a TPU partner. However, analysts debate the size of this partnership and the specific TPU variants that MediaTek is working on.

JPMorgan Shows Confidence in Broadcom’s TPU Leadership

Considering this, JPMorgan’s analysis is positive for Broadcom. Currently, Google is on its eighth generation TPU, TPU v8, which features multiple variants. JPMorgan says that the five-year agreement that Google and Broadcom signed in March “locks in Broadcom’s TPU design win roadmap for the next four generations of TPU chips through v11.” JPMorgan also believes this means that Broadcom’s TPU revenues will increase annually through 2031. Furthermore, JPMorgan argues that investors should dismiss reports of delays in the TPU v9 program, saying that TPU v9 is on track to ramp up in 2028.

This pushes back on other reporting that Broadcom’s TPU v9 progress is facing delays. These reports argue that Broadcom has “lost its leading position," which has allowed MediaTek to win major orders for the TPU v9.

For its part, JPMorgan is showing a fairly significant amount of confidence that Broadcom remains in pole position within Google’s TPU program. The firm demonstrates this by reiterating its $580 target—a level that many Wall Street targets sit well below.

Additionally, there is real disagreement around MediaTek’s specific involvement with Google. JPMorgan argues that Broadcom is developing the inference-optimized TPU v8i, while MediaTek is working on the training-optimized TPU v8t. Other industry reports point to MediaTek designing the v8i and Broadcom designing the v8t.

Beyond the Rumors: Broadcom’s AI Chip Business Continues to Explode

For investors, there are several key takeaways. First off, reports among these various sources contradict one another. This is true regarding potential delays with Broadcom’s TPU v9 and which variants Broadcom and MediaTek are working on in the TPU v8. Thus, at this point, it is best to focus on facts and the points of general consensus.

Broadcom has been working with Google for a long time. Broadcom expects its AI semiconductor revenue to rise by over 200% year over year next quarter to $16 billion. Meanwhile, just months ago, Google and Broadcom entered a long-term agreement for Broadcom to develop and supply future generations of TPUs. In its fiscal year 2027, Broadcom expects to generate more than $100 billion in AI semiconductor revenue.

However, all cited reports state that MediaTek is also involved in TPU development. Hock Tan did little to push back on this with its recent statement. MediaTek also recently raised its custom AI chip revenue forecast in 2026 to $2 billion. It estimates that this market will be worth $70 billion to $80 billion in 2027. The company is targeting 10% to 15% of that total in the coming years, implying an opportunity well above $2 billion. Still, Broadcom’s AI chip business is far larger today and is growing extremely fast.

Overall, with limited clarity today, the relationship between Google, Broadcom, and MediaTek is a risk to watch going forward, but not worth the panic. In the meantime, one of Wall Street’s top banks, JPMorgan, is calling for Broadcom shares to eclipse previous all-time highs by $100.