Broadcom's New Google Chips Could Be 40% Cheaper To Run Than Nvidia's, Analyst Says

Core Viewpoint - Broadcom Inc is positioned to benefit from Google's increasing reliance on its Tensor Processing Units (TPUs), which are expected to drive significant growth in Broadcom's revenue from TPU shipments and pricing [1][2][3]. Group 1: Market Dynamics - BofA Securities analyst Vivek Arya has reiterated a Buy rating on Broadcom, raising the price target from $400 to $460, citing Google's push for TPUs as a key growth driver for Broadcom [2]. - The TPU average selling price is projected to rise from approximately $5,000 to $6,000 in 2025 to between $12,000 and $15,000 in 2026, with potential shipments increasing from two million units to over three million units [4]. - If demand from Google and new external customers like Anthropic and Meta expands, shipments could reach between 3.6 million and 3.8 million units [4]. Group 2: Competitive Landscape - The TPUv7 is expected to outperform NVIDIA's GB300 in power efficiency for specific AI training tasks, offering about 5.4 TFLOPs per watt compared to NVIDIA's 3.6 TFLOPs per watt, potentially leading to a 40% lower total cost of ownership for optimized workloads [5]. - Future competition may arise from NVIDIA's upcoming Vera Rubin architecture, which could surpass TPU in memory technology and system cost when launched in late 2026 [6]. - Google’s potential shift from renting TPUs through Google Cloud to direct sales could introduce new competition for Broadcom's custom ASIC customers, including Meta, ByteDance, and OpenAI [7]. Group 3: Financial Projections - Arya anticipates that Broadcom's custom ASIC and TPU products could capture up to 15% of the estimated $900 billion AI accelerator market by 2030, up from 8% this year [8]. - The projected earnings per share (EPS) for Broadcom is modeled to exceed $23 by 2030, with adjusted gross margin expectations reflecting a higher mix of compute silicon [8]. - For the fourth quarter, revenue is projected at $17.445 billion, an increase from the previous forecast of $17.405 billion, while adjusted EPS is expected to be $1.83, slightly down from prior guidance of $1.85 [9].