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▲ Alphabet (GOOGL), Google, US Stock Market/AI Generated Image ©
Alphabet has challenged Nvidia's exclusive hardware stronghold by deciding to directly sell its self-developed artificial intelligence (AI) chips to external data centers.
According to cryptocurrency specialized media Watcher.Guru on September 22 (local time), Alphabet announced that it would directly supply custom Tensor Processing Units (TPUs), which were previously developed exclusively for Google Cloud servers, to external data centers. However, as the structure involves cooperation with external manufacturers for chip manufacturing and packaging rather than handling everything in-house, related partner companies are expected to be direct beneficiaries.
Commercial agreements include inference accelerators, storage controllers, and near-memory computing. Experts have named Broadcom as the biggest beneficiary of Google's custom AI chip sales. Alphabet has a long-term contract with Broadcom to jointly develop and supply custom TPUs, and has also signed a contract for the supply of networking components for next-generation AI racks.
This partnership agreement is valid until 2031, guaranteeing stable additional revenue for the next five years. Indeed, Broadcom's AI semiconductor revenue surged by 143% year-over-year to $10.8 billion in the previous quarter, and further expanded to $16.7 billion in the third quarter of the fiscal year, announced in early September.
Market experts predict that Broadcom's revenue estimate for the next quarter could reach up to $21.7 billion. If the trickle-down effect from expanded Google chip sales fully materializes, Broadcom's growth could accelerate even further, making it a strong candidate for purchase.
The media diagnosed that with Google's entry into the hardware market intensifying competition with Nvidia, a long-term holding strategy of over 5 years for Broadcom is effective, as it secures actual revenue regardless of the chip's origin.
*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*
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