Why Broadcom (AVGO) Is Poised to Outperform Nvidia (NVDA) in 2026 AI Processor Growth

The AI chip market is entering a pivotal phase in 2026, with supply chain dynamics and strategic partnerships emerging as critical differentiators between industry leaders. While both Broadcom (AVGO) and Nvidia (NVDA) are dominant players in the AI processor space, Broadcom's unique position in the HBM supply chain and its deep integration with Google's Tensor Processing Unit (TPU) ecosystem position it to outperform Nvidia in the coming year. This analysis examines how Broadcom's supply chain advantages, bolstered by its exclusive HBM agreements with Samsung and Google's TPU growth trajectory, contrast with Nvidia's HBM bottlenecks and overhyped competition.

Broadcom's Strategic HBM Supply Agreements with Samsung

Broadcom has secured a critical edge in the AI processor race by locking in a significant portion of Samsung's HBM production capacity. According to a report by , Samsung has committed half of its annual HBM output to supply Broadcom with both HBM3E and HBM4 chips for Google's TPUs. This agreement ensures Broadcom's access to cutting-edge memory technology, including Samsung's sixth-generation HBM4, which has already exceeded performance targets in testing. Samsung's investment in expanding HBM production, including wafer capacity at its Pyeongtaek campus, further solidifies this supply chain advantage. By 2026, Samsung is expected to supply more than three times the current volume of HBM to Google, enabling Broadcom to scale TPU production without the constraints faced by competitors.

In contrast, Nvidia's reliance on SK Hynix for HBM supply is a growing vulnerability. As noted in a report by , SK Hynix's HBM3E and HBM4 production is fully booked through 2026, with no immediate relief expected. This bottleneck is exacerbated by the complexity of HBM manufacturing, which involves time-intensive processes like TSVs and 3DIC stacking. Meanwhile, Samsung's ability to offer larger volumes at lower prices compared to SK Hynix gives Broadcom a cost and scalability edge.

Google's TPU Growth Trajectory and Broadcom's Role

Google's TPU shipments are projected to surge from 1.5–2 million units in 2025 to 8–9 million by 2028. Broadcom, as the sole designer and seller of Google's TPUs, is uniquely positioned to capitalize on this growth. The company's partnership with Samsung ensures a steady supply of HBM4, which is critical for the 8th-generation TPU. According to , Samsung's HBM4 is expected to enter full production in 2026, aligning with Google's aggressive expansion plans. This synchronization of supply and demand creates a flywheel effect, where increased TPU shipments drive higher revenue for Broadcom and reinforce its leadership in the AI chip market.

Nvidia, on the other hand, faces uncertainty in scaling its Blackwell Ultra GPU due to HBM shortages. As highlighted by , HBM pricing is expected to rise by 15–20% in 2026, with hyperscalers pre-paying for memory to secure supply. This scarcity limits Nvidia's ability to meet surging demand for its AI processors, particularly for the upcoming Vera Rubin platform.

Morgan Stanley's Price Targets and Growth Forecasts

Morgan Stanley's recent revisions underscore Broadcom's favorable outlook. The firm raised its price target for AVGO to $443 from $409, citing "stronger-than-expected AI revenue growth" driven by supply chain constraints and Google's TPU expansion. Analyst Joseph Moore emphasized that Broadcom's large AI exposure, including its role in designing Google's TPUs, is a "significant growth tailwind." For Nvidia, the firm also increased its price target to $250 from $235 but noted that customers' primary concern is securing enough NVIDIA product, particularly as HBM bottlenecks persist.

This divergence in forecasts reflects the structural advantages Broadcom holds. While Nvidia's dominance in the AI market remains intact, its growth is increasingly constrained by external factors like HBM availability. Broadcom, by contrast, has engineered a self-reinforcing ecosystem where its control over HBM supply and TPU design creates a moat against competitors.

Conclusion: Supply Chain Mastery and AI Adoption Tailwinds

Broadcom's strategic alignment with Samsung and Google positions it to outperform Nvidia in 2026 AI processor growth. The company's exclusive access to HBM4, combined with Google's TPU expansion, ensures a scalable and profitable path forward. Meanwhile, Nvidia's reliance on overbooked HBM suppliers and rising costs creates a drag on its ability to meet demand. As Morgan Stanley's revised targets suggest, investors should favor Broadcom's supply chain resilience and deterministic growth trajectory over Nvidia's overhyped but constrained momentum. In the next phase of the AI super-cycle, Broadcom's ability to deliver high-bandwidth memory solutions will be a defining factor in its outperformance.