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Bernstein Highlights Broadcom's ASIC Upside as Google Pushes TPUs and AMD's Competitive Risk
Wednesday, November 26, 2025 at 06:44 AM
An analyst note from Bernstein positions Broadcom (AVGO) as a clear winner in the custom AI chip market, acting as the ASIC partner for both Google's successful TPU program and Meta's chips, and suggesting AVGO's AI revenue could be significantly underestimated ($40B by FY26). The note suggests this growing ASIC trend is incrementally negative for AMD, whose competitive strategy relies on becoming the primary alternative to NVIDIA's GPUs.
Context
A recent Bernstein note highlights a significant shift in the AI chip landscape as Google successfully markets its custom Tensor Processing Units (TPUs) to external customers, with Meta reportedly in talks for a multi-billion dollar deal for implementation by 2027. This development validates Google's decade-long ASIC strategy, executed in partnership with Broadcom (AVGO), and establishes TPUs as "the only really successful ASIC program" at scale. The move comes as the market faces extreme "compute scarcity," pushing buyers to diversify hardware sources beyond Nvidia.
This trend positions Broadcom as a major winner, with Bernstein projecting its AI revenue could reach $40B in FY26 and ~$63B in FY27—figures the analyst believes are far above underestimated Street consensus. Conversely, the news creates an incremental headwind for AMD. AMD has built its narrative around becoming the primary GPU alternative to Nvidia, but if major cloud players adopt Google's TPUs as their second source, it could undermine AMD's long-term growth story. While the overall AI hardware market is large enough for both chip types to thrive, this dynamic introduces a new competitive threat to AMD's strategy.
Sources (24)
Google's TPU success raises questions for AMD stock, ...Google just secured its largest TPU deal ever with ...Daily Discussion Tuesday 2025-11-25 : r/AMD_StockBroadcom's AI Chip Momentum: Why AVGO Outpaces ...Goldman Sachs revamps Broadcom stock price target with ...UBS optimistic on Broadcom stock with FY26/FY27 AI revenue ...Broadcom sees strong AI growth for fiscal 2026 on new customer ...AVGO and PM: Analysts Say These Are Their Top Picks for 2026
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