Broadcom’s AI Chip Business Is Booming, But Alphabet’s Strategy Highlights 2 Key Risks

Despite Broadcom NASDAQ: AVGO expecting its AI semiconductor sales to nearly quadruple over its next two fiscal years to $230 billion, the stock’s outlook faces risks.

The firm expects Anthropic to become its largest XPU customer next year and OpenAI its second-largest by fiscal year 2028 (FY2028). While growing demand from both companies is driving this shift, another factor is less encouraging: Alphabet NASDAQ: GOOGL is diversifying its tensor processing unit (TPU) suppliers, potentially reducing its reliance on Broadcom.

Broadcom has now confirmed that another chip design company will be a part of Alphabet’s TPU development, taking market share in a program that Broadcom has long dominated. Related to this is the customer-owned tooling…