Broadcom shares rose after Morgan Stanley defended its AI chip business, but the stock remains well below its June high as investors debate the impact of Google's supplier diversification and MediaTek's growing role
Broadcom shares staged a modest recovery on July 14, 2026, after Morgan Stanley issued a strong defense of the company's position in the artificial intelligence chip market. The move offered some relief for investors, but the stock remains down sharply from its record high set just six weeks earlier, reflecting persistent doubts about Broadcom's long-term hold on a key customer: Google.
Broadcom Inc. (AVGO) closed at $389.11 on Tuesday, up 1.32% for the day, though it had climbed nearly 3% earlier in the session. Despite the rebound, the stock is still down about 19% from its all-time closing high of $480.77 reached on June 2, 2026, according to TheStreet. Year-to-date, Broadcom's gains have lagged the broader semiconductor sector, raising questions about why a company with surging AI chip revenue is underperforming its peers.
Google Supplier Anxiety
Morgan Stanley analyst Joseph Moore addressed the underperformance directly, attributing it to investor concerns that Taiwan's MediaTek is quietly taking over Broadcom's role in building Google's Tensor Processing Units (TPUs)-custom AI chips that power Google's data centers and compete with Nvidia's offerings. Moore argued that while MediaTek's involvement is real, it is unlikely to disrupt Broadcom's dominant position in the near term. He maintained an overweight rating and a $502 price target, estimating Broadcom will retain roughly 80% of Google's TPU business over time.
Moore's view contrasts with more bearish projections from other analysts. Macquarie, for example, expects Broadcom's share of Google's TPU revenue to fall from about 95% in 2026 to 80% in 2027 and 65% in 2028. The debate highlights the uncertainty around how quickly Google will diversify its chip suppliers and how much business Broadcom could lose as a result.
AI Revenue Growth vs. Market Skepticism
Broadcom's financial results underscore why the stock's recent weakness has puzzled some on Wall Street. In its fiscal second quarter, Broadcom reported record revenue of $22.19 billion, up 48% from a year earlier. AI semiconductor revenue soared 143% to $10.8 billion, and the company told investors it expects AI chip sales to grow more than 200% in the current quarter. Such rapid growth would typically support a stronger stock performance, but concerns about customer concentration and future market share have weighed on sentiment.
The skepticism intensified after Broadcom's June 3 earnings call, when the company beat revenue estimates but did not raise its full-year AI chip sales target. Shares fell about 15% the next day. CEO Hock Tan acknowledged that Google is likely to use multiple chip suppliers going forward, fueling speculation that Broadcom's grip on the TPU business could loosen faster than previously expected.
Analyst Divide and Broader Implications
Not all analysts are aligned on Broadcom's outlook. While Moore's 80% share estimate is more optimistic than Macquarie's, some banks are even more bullish. JPMorgan has reiterated an overweight rating and a $580 price target, arguing that Google's TPU program has not been delayed or canceled despite supply chain rumors. Bernstein's Stacy Rasgon has suggested the stock may simply need time to adjust to the transition before growth resumes. The range of analyst targets reflects an active debate about the pace and scale of Google's supplier diversification.
Broadcom is not solely dependent on Google. The company recently extended its custom silicon partnership with Meta and signed a chipmaking agreement with Apple worth more than $30 billion. This diversification helps hedge against the risk of any single customer reducing orders, a strategy increasingly important as large tech companies treat supplier concentration as a risk to manage rather than a relationship to reward. For investors, the key question is not whether Broadcom will lose some share of Google's TPU business, but how quickly-and whether overall AI chip spending will grow fast enough to offset a smaller slice of the pie.
Investor anxiety over supplier shifts is not unique to Broadcom. As seen in other sectors, such as the recent pullback in Bloom Energy shares discussed in this analysis of buy-the-dip opportunities in energy stocks, market reactions to changing customer relationships can create both risks and openings for long-term investors.
Key Numbers and Market Context
Broadcom's AI chip business has become a major growth engine, with AI semiconductor revenue reaching $10.8 billion in the fiscal second quarter of 2026, up 143% year over year. The company's total revenue for the quarter was $22.19 billion, a 48% increase from the prior year. Despite these gains, Broadcom's stock is down nearly 20% from its June peak, reflecting investor caution about future market share and the durability of its relationships with major customers like Google, Meta, and Apple.
As the AI chip market evolves, supplier diversification is likely to remain a central theme. Large technology companies are increasingly spreading their orders among multiple manufacturers to reduce risk and increase bargaining power. For chipmakers, this means that even as the total market expands, the share of business from any one customer may shrink over time. Investors should watch not only for headline revenue growth, but also for shifts in customer concentration and the competitive landscape among suppliers.
