Broadcom: Multisourcing Doesn’t Erode Massive Growth and a Buying Opportunity

Key Morningstar Metrics for Broadcom

• : $650.00
• : ★★★★

• Morningstar Economic Moat Rating

  : Wide

• Morningstar Uncertainty Rating

  : High

Marvell Technology and Google announced a commercial agreement for custom chips, including AI inference accelerators. Broadcom AVGO shares fell 5% intraday. This is the latest iteration of reports that Google is qualifying new sources for its TPU chips, including MediaTek and, potentially, AMD.

Why it matters: The market is pessimistic about Broadcom amid Google’s multisourcing, and we disagree. We expected Google to qualify new sources, and Broadcom is diversifying into new customers. Our medium-term growth forecast and buy call are led by ramps for OpenAI and Anthropic.

• Google’s multisourcing (or at least reports thereof) is happening faster than we expected, but we see this evincing a growing pie for TPU sales rather than a direct eating of Broadcom’s position. Still, while we previously expected Broadcom to…