Yahoo Finance·2025-12-03 19:47Core Viewpoint - Google is making significant progress in the AI chip market with its custom Tensor Processing Units (TPUs), while Broadcom is viewed as a stronger investment opportunity due to its role in the supply chain and design of these chips [1][2]. Group 1: Google’s AI Chip Development - Google’s TPUs have been in development since 2016 and are now in their seventh generation with the new Ironwood model [3]. - The Ironwood model is reported to be over four times faster than its predecessor and nearly 30 times more power efficient than the original version from 2018 [4]. - Google’s token processing volumes have increased from 480 trillion in April to 1,300 trillion in October, indicating a growing demand for compute power [6]. Group 2: Broadcom’s Investment Potential - Morgan Stanley raised its price target on Broadcom to $443, linking its success to the demand for custom AI chips that it helps design and manufacture [2]. - Broadcom's stock rallied 11% in a single trading session last month, reflecting its status as a derivative play on Google’s AI momentum [2]. - Melius Research and Jefferies have raised their price targets on Broadcom to $475 and $480 respectively, suggesting potential upside of more than 40% [5]. Group 3: Market Dynamics - The enthusiasm surrounding Google’s Gemini 3 AI model has further increased optimism about TPU demand [5]. - Broadcom is a major supplier of application-specific integrated circuits (ASICs) to hyperscalers, which positions it favorably as the market for custom AI chips expands [3][4].