Alphabet (NASDAQ:GOOG | GOOG Price Prediction) and Broadcom (NASDAQ:AVGO) both delivered blockbuster AI quarters, but the results hide a widening strategic gap. Alphabet is a hyperscaler feeding its own custom chips into a $460 billion cloud backlog. Broadcom is the merchant silicon supplier riding that same wave. Same AI supercycle. Very different positions in the value chain.
TPUs Feed the Cloud. Broadcom Sells the Picks and Shovels.
Google’s Q1 FY2026 landed with EPS of $5.11 against a $2.63 consensus, a fourth straight beat, on revenue of $109.90 billion (+21.8% YoY). Google Cloud was the star at $20.03 billion (+63% YoY), with Sundar Pichai noting Gemini is now “processing more than 16 billion tokens per minute via direct API use”. CapEx more than doubled to $35.67 billion, with 2026 guidance calling for $175 to $185 billion. That spend flows straight into Google’s own TPU stack.
Broadcom’s Q2 FY2026 was strong. EPS of $2.44 beat by 1.79%, and AI semiconductor revenue jumped to $10.80 billion, up 143% YoY. Hock Tan guided Q3 AI revenue to $16.0 billion, over 200% YoY. The catch: that growth depends on a handful of hyperscalers, and one of them, Google, is a customer aggressively vertical integrating.
Hyperscaler Kingpin vs. Silicon Middleman
Alphabet bypasses the hardware margin squeeze entirely. It designs TPUs, monetizes them through Cloud, and layers a sovereign Gemini ecosystem on top. Multi-gigawatt compute deals with Anthropic plug directly into that stack. Broadcom sells accelerators and Ethernet switches into the same customers but faces rising foundry costs and a crowded custom ASIC field with Marvell competing for socket wins.
| Lens | GOOG | AVGO |
| Forward P/E | 25x | 20x |
| Trailing P/E | 27x | 60x |
| YTD Return | +13.65% | +4.53% |
| 1-Month | -0.56% | -25.03% |
The valuation asymmetry is stark. Google trades cheaper on forward earnings than a fabless chipmaker with severe customer concentration risk. AVGO shed roughly a quarter of its value in the last month, and founder Henry Samueli unloaded over 1 million shares on June 24 alone. That is not typical rebalancing.
The Anthropic Compute Race Decides Who Pulls Ahead
Watch Google Cloud’s backlog conversion, Gemini Enterprise’s 40% QoQ growth in paid MAUs, and whether TPU capacity keeps absorbing internal AI workloads. For Broadcom, keep an eye on whether the $16 billion Q3 AI target holds if any hyperscaler pulls back custom ASIC orders in favor of in-house silicon.
Why I’d Take the Vertical Stack Over the Silicon Middleman
I lean toward Google. Owning the chips, the cloud, the models, and the distribution surface gives it pricing control that a merchant chipmaker cannot replicate. At 25x forward earnings with a $426.62 analyst target, the risk-reward looks cleaner than paying 60x trailing for AVGO’s exposure to the same customers Google is quietly disintermediating. For me, the hyperscaler kingpin monetizing its own chips end-to-end is the better place to sit in 2026.
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