Broadcom’s TPU Dominance Reaffirmed, but Insider Selling and a Sector Rotation Subplot Test the Rally

Even as Broadcom solidifies its standing as the second-biggest winner from the artificial intelligence chip boom — trailing only Nvidia — its stock has been conspicuously lagging the broader semiconductor rally this year. Morgan Stanley analyst Joseph Moore flagged that very disconnect this week, calling it an open secret on Wall Street. The culprit? Lingering anxiety over whether Taiwanese rival MediaTek will eat Broadcom’s lunch in the critical Google Tensor Processing Unit (TPU) business.

Morgan Stanley moved to douse those fears on Tuesday, reiterating an Overweight rating and a $502 price target on Broadcom. Moore argued that predictions of MediaTek grabbing half the TPU business or even displacing Broadcom entirely are “premature.” The bank expects Broadcom to hold roughly 80% of the TPU revenue long-term, with MediaTek capped at 15% to 20% — a figure that aligns with MediaTek’s own internal targets. Drawing a parallel to last year’s hand-wringing over Marvell and Alchip encroaching on Amazon’s Trainium chip, Moore noted that those fears proved unfounded.

The barriers for MediaTek are steep. Morgan Stanley’s Taiwan team points out that even with a 2-nanometer production process, MediaTek will still need access to CoWoS advanced packaging capacity — capacity Broadcom has already locked in through existing contracts. The alternative EMIB packaging technology remains unproven at the scale Google demands. High-bandwidth memory (HBM) shortages add another layer of difficulty, and system-level validation at Google’s volume is no small feat.

Broadcom’s stock inched up 1.17% to €344.50 on Tuesday, building on a 2.85% rally the prior session. That still leaves it nearly 20% below its 52-week high of €429.60 reached on June 3, though the gap to the 52-week low of €237.05 from July 2025 stands at a comfortable 45.33%. The shares are trading just below their 50-day moving average of €349.47 but well above the 200-day average of €313.48, signaling the long-term uptrend remains intact. The relative strength index sits at 52.4, neutral territory, while 30-day annualized volatility hovers near 50%. Year-to-date gains stand at 16.13%, and the 12-month return is 42.24%.

Should investors sell immediately? Or is it worth buying Broadcom?

Underpinning the bullish thesis is a string of catalysts beyond the TPU debate. Apple recently struck a five-year, $30 billion deal with Broadcom for wireless chips, and is investing $1.5 billion to expand a Broadcom facility in Fort Collins, Colorado. Apple plans to pair its own C1/C1X 5G modem technology with Broadcom’s radio-frequency components as part of a $600 billion U.S. investment commitment. Operationally, Broadcom beat Q2 earnings estimates with $2.44 per share on revenue of $22.19 billion (up 47.9%). Its Q3 revenue guidance of $29.4 billion topped the Street’s $28.54 billion consensus. The full-year AI revenue forecast of $56 billion for fiscal 2026 climbs to more than $100 billion for fiscal 2027, with Morgan Stanley modeling $120 billion in total AI revenue that year — roughly $80 billion from TPUs alone. The bank’s bull case sees the stock reaching $637, while the bear case sits at $308. Wall Street’s average target ranges from $457 to $513, with JPMorgan leading the optimists at $580.

Yet alongside the analyst enthusiasm, insider selling has been conspicuous. Chief Legal Officer Mark Brazeal sold 25,000 shares worth about $10.03 million on July 10. Over the past three months, total insider disposals have reached $273.7 million — a figure that may temper some of the near-term enthusiasm.

The broader market environment gave Broadcom a tailwind last week. A surprisingly soft U.S. consumer price index for June — down 0.4% monthly with an annual rate of 3.5% — sparked a relief rally across chip stocks, including Nvidia, Micron, and AMD. An unexpected profit warning from IBM sent its stock crashing 25%, triggering a rotation from software into hardware names that further benefited Broadcom.

The MediaTek overhang is unlikely to vanish overnight. The real test will come in the coming quarters, as Google allocates development work for the next generation of TPUs between the two suppliers. For now, Morgan Stanley has placed Broadcom near the top of its coverage list, just behind Nvidia, as one of the preferred AI compute plays — a status the company’s recent price action has yet to fully reflect.