Analysts at JPMorgan said in a note Thursday that Broadcom (NASDAQ:AVGO) has secured the design contract for Google's next-generation AI chip, the TPU v7.
JPMorgan cites "primary research efforts" and Broadcom's recent analyst day announcement as reasons it believes the company won the next-gen Google AI chip design.
This "marks seven generations of AI processor chip families that Broadcom has helped Google bring to market," the note from JPMorgan states.
This long-standing partnership positions Broadcom to benefit significantly from Google's ongoing investment in AI technology.
Analysts at JPMorgan project that Google's TPU program will generate over $8 billion in revenue for Broadcom this year, reflecting a 125% year-over-year increase. They forecast this number to climb to over $10 billion in 2025. This growth is attributed to the upcoming TPU v5 and v6 chips.
The report also highlights Broadcom's success with Meta Platforms. "Meta engaged with Broadcom to co-design Meta's first- and second-generation AI training processors," the analysts say.
They expect Broadcom to ramp production of Meta's third-generation AI chip (MTIA 3) in the latter half of 2024 and into 2025.
Overall, analysts estimate Broadcom's AI revenue will reach $11-12 billion this year and surpass $14-15 billion in 2025. This positions Broadcom as the second-largest AI semiconductor supplier globally, behind Nvidia.
Analysts emphasize Broadcom's dominance in the leading-edge custom chip design market (7nm, 5nm, 3nm, 2nm). They estimate the company holds a 55-60% market share in this segment, with a customer base that includes major tech players like Apple, Microsoft, and Meta.
The bank reiterated its Overweight rating on Broadcom's stock (AVGO).