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Investing.com - Bernstein has issued a cautious note on Advanced Micro Devices (NASDAQ:AMD), suggesting that Google’s Tensor Processing Units (TPUs) success "feels incrementally negative to the AMD narrative."
The research firm points out that Google’s TPUs represent "the only really successful ASIC program" that has reached significant scale, developed over more than a decade in partnership with Broadcom (NASDAQ:AVGO). Google’s reported efforts to expand TPU usage to external customers, potentially including Meta, could challenge AMD’s positioning.
Bernstein notes that AMD has built its growth story around becoming "the viable second source" to NVIDIA (NASDAQ:NVDA) and has aligned closely with OpenAI. The firm questions whether investors will remain confident in AMD’s long-term targets if Google’s Gemini gains dominance over ChatGPT and TPUs become viable alternatives for AI customers.
The analyst emphasizes that the current market is characterized by "compute scarcity" rather than saturation, suggesting the overall opportunity remains substantial enough for both GPU and ASIC approaches to succeed if AI demand continues growing.
Broadcom emerges as a potential beneficiary in Bernstein’s analysis, as the company partners with Google on TPUs and has also worked with Meta on custom ASICs, with the firm believing that current Street estimates for Broadcom’s AI revenue appear "far too low."
In other recent news, Alphabet’s quarterly backlog growth of $49 billion was bolstered by a significant agreement with OpenAI, which has become a notable cloud customer. Additionally, Meta is reportedly in discussions to purchase Tensor Processing Units (TPUs) from Google for its data centers, potentially impacting Alphabet’s cloud business. Alphabet’s expansion of its TPU AI chip has positively affected its Asian suppliers and is seen as a challenge to Nvidia’s market position in AI chips. BNP Paribas Exane has initiated coverage on Alphabet with an Outperform rating, citing its strong position in AI, cloud computing, and video advertising. Similarly, Citizens analyst has reiterated a Market Outperform rating, highlighting the growth of Alphabet’s autonomous vehicle unit, Waymo. Meanwhile, DA Davidson has maintained a Neutral rating for Alphabet, setting a price target of $300.00. These developments underscore Alphabet’s strategic maneuvers in the tech industry, as it navigates partnerships and competitive challenges.
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