Keep on Buying Broadcom Stock on “Rising TPU Leverage,” Says BofA

Broadcom (NASDAQ:AVGO) is the design partner for Google’s TPUs with the Gemini 3 model running on the latest TPUv7, but how does it stack up against AI chip king Nvidia’s offerings?TipRanks Cyber Monday Sale Claim 60% off TipRanks Premium for data-backed insights and research tools you need to invest with confidence. Subscribe to TipRanks' Smart Investor Picks and see our data in action through our high-performing model portfolio - now also 60% off That is something BofA analyst Vivek Arya recently looked into. The conclusion? “TPU may match GB300, but perhaps not Vera Rubin,” Arya, who ranks among the top 3% of Street stock experts, opined. The TPUv7 can deliver higher power efficiency than Nvidia’s latest GB300 for workloads it’s specifically designed for, such as pre-training and FP8 (8-bit floating-point) operations in large language model (LLM) training – achieving 5.42 TFLOPs/W compared with 3.57 TFLOPs/W for the GB300. TCO (total cost of ownership) can also be up to ~40% lower for FP8 workloads, although it may be up to ~45% higher for FP4/NVFP4 workloads. While these figures highlight the TPU’s competitiveness, actual performance in real-world scenarios can vary widely depending on workload types, ecosystem and model support, and software optimization. Additionally, Nvidia’s upcoming Vera Rubin (expected in the second half of 2026) with HBM4, the new Kyber rack, and other architectural improvements could deliver substantial TCO advantages, whereas TPUv8 (expected in 2027) is likely to be only a modest upgrade, still using HBM3e with roughly half the memory bandwidth. “While the TPU may be well-optimized for a limited number of tasks, we believe the GPU to remain on top in majority of AI workloads, given its incumbency, and wide ecosystem support,” the 5-star analyst went on to say. Overall, however, Arya sees the “rising TPU leverage” as a positive development for Broadcom, Google’s “key design partner,” with the present ASP of ~$5,000–6,000 and around 2 million units shipping in CY25E likely to rise to a $12,000–15,000 ASP and over 3 million units in CY26E. If demand continues to grow – potentially driven by Google’s internal needs as well as Anthropic or Meta – Arya thinks unit shipments could reach 3.6-3.8 million, depending on supply availability. There are some risks involved here. If Google moves beyond offering TPUs solely through GCP and begins selling the chips directly as merchant silicon, it could introduce new competition for Broadcom’s other custom silicon (ASIC) clients, including Meta, ByteDance, and OpenAI. Additionally, Google might bring MediaTek on board as a design partner for the next-generation TPUv8 – allocating the high-end TPUv8AX to Broadcom and the lower-end TPUv8X to MediaTek – which could reduce Broadcom’s overall share. Nevertheless, anticipating greater ASIC sales over time (albeit with slightly lower gross margins), Arya has raised his AVGO price objective from $400 to $460, suggesting the stock will gain 14% over the coming months. Arya’s rating stays a Buy. (To watch Arya’s track record, click here) Elsewhere on the Street, the shares claim an additional 28 Buys and 2 Holds, for a Strong Buy consensus rating. However, going by the $401.5 average target, shares will stay rangebound for the time being. It will be interesting to see whether other analysts raise their price targets or downgrade their ratings shortly. (See AVGO stock forecast)