Broadcom maintains $502 target as Morgan Stanley calls it core AI winner

Morgan Stanley reiterated its Overweight rating on Broadcom Inc. with a $502 price target, calling the chipmaker a "core AI winner" second only to Nvidia and dismissing concerns that MediaTek will erode its Google TPU business.

"MediaTek participation is real, but not disruptive," Joseph Moore, analyst at Morgan Stanley, said in a note Tuesday. The firm projects Broadcom will retain about 80% of Google's tensor processing unit supply over the long term, with bearish calls for 50% share loss or complete displacement deemed "premature."

Broadcom shares rose 2.85% on Tuesday to around $389, paring their year-to-date decline from a record closing high of $481.57 on June 2. The stock has gained about 14% this year, trailing the iShares Semiconductor ETF's roughly 90% advance. Morgan Stanley forecasts Broadcom will deliver approximately $120 billion in AI-related revenue in fiscal 2027, with TPU-associated revenue comprising roughly $80 billion of that figure.

The $502 price target implies about 29% upside from current levels. Moore said Broadcom's supply chain advantages — including secured high-bandwidth memory supply and proven packaging execution at scale — create barriers that MediaTek cannot easily overcome. MediaTek's own long-term target of 15% to 20% market share, as communicated publicly, falls far short of a market takeover, the analyst noted. Broadcom also expects multiple new ASIC customers to begin ramping in the second half of 2027, providing additional growth beyond Google.

The reaffirmation signals that Wall Street's conviction in Broadcom's AI positioning remains intact despite competitive noise. Investors will watch for updates on new ASIC customer wins and the trajectory of TPU-related revenue as a share of total AI sales, which Morgan Stanley expects to decline to about 60% as other clients commence production.

This article is for informational purposes only and does not constitute investment advice.