As the AI trading frenzy reignites, capital is rapidly flowing into the "Google Chain."
On Monday, driven by strong performance from Alphabet (Google's parent company), shares of its key chip partner Broadcom skyrocketed, jointly fueling a tech sector rebound. This reflects investors' renewed optimism about the vast potential of the custom chip (ASIC) market and Google's counteroffensive in AI.
Broadcom closed up 11.1%, marking its best single-day performance since April 9 and becoming the top gainer in the S&P 500. Alphabet rose over 5% during the same session. This market movement isn’t just a stock correlation—it’s backed by industry acknowledgment. OpenAI CEO Sam Altman recently admitted in an internal memo that Google’s latest AI advancements could create "temporary economic headwinds" for OpenAI, signaling unprecedented competitive pressure.
According to The Information, Altman told employees that Google has excelled in AI pre-training, narrowing the tech gap and making the external environment "quite challenging" for OpenAI. Goldman Sachs traders noted that the market initially underreacted to Gemini’s progress versus ChatGPT, resulting in mispricing.
As capital flows shift dramatically, the market is pivoting from OpenAI-linked stocks to the "Google Chain." Goldman’s trading desk data shows Alphabet and Broadcom are emerging as strong alternatives to the "OpenAI Chain" (represented by Microsoft and Oracle), with investors betting on Google’s robust cloud infrastructure and in-house chip ecosystem.
**ASIC Market Rediscovered** Broadcom’s rally reflects bullish sentiment around custom chips (ASICs). As a top supplier of hyperscale data center ASICs, Broadcom has surged 60% year-to-date. CNBC highlighted its tight partnership with Alphabet, co-designing Google’s Tensor Processing Units (TPUs)—core to Google’s AI infrastructure and a rival to Nvidia’s GPUs in AI workloads.
Wall Street analysts have upgraded Broadcom, citing a pivotal inflection point. Jefferies’ Blayne Curtis projects ASIC output will surge by 2026–2027 as Google’s token processing scales, especially with rising demand for multimodal models. He named Broadcom a top pick, raising its target to $480. Wedbush’s Dan Ives noted the market is "rediscovering" ASICs, led by Google’s mature TPUs. Melius Research’s Ben Reitzes emphasized their seven-generation collaboration, now translating into Broadcom’s AI revenue growth and Google Cloud’s expansion.
**OpenAI Acknowledges Google’s Tech Catch-Up** While the market votes with its feet, OpenAI internally feels Google’s heat. Per The Information and Bloomberg, Altman warned in an October memo that Google’s Gemini 3, upcoming 7th-gen TPU "Ironwood," and new agent platform "Antigravity" signal a potential breakthrough.
Altman singled out Google’s pre-training success—a historically tough area for both firms—admitting it may pressure OpenAI financially. Beyond Google, OpenAI faces fierce competition from Anthropic, which reportedly could outearn it in AI sales this year despite being four years younger.
Though ChatGPT still leads Gemini in usage and revenue, Altman conceded the gap is shrinking, forcing OpenAI to redirect resources toward refining inference models and fixing pre-training flaws in its new "Shallotpeat" model to retain its edge.
**Financial Muscle: A Key Divergence** Google’s financial strength is another reason investors favor the "Google Chain." While OpenAI burns billions pursuing AGI (projected to exceed $100B in coming years), Alphabet—valued at $3.5T—generated over $70B in free cash flow in just four quarters.
Moreover, Google’s thriving cloud business even rents servers to rivals like OpenAI and Anthropic. Goldman’s Mike Wilson argued the market must recognize Gemini’s strides, which were initially mispriced. With Google demonstrating integrated strength in AI models, infrastructure chips (e.g., TPUs with Broadcom), and financial resilience, investors see the "Google Chain" offering superior risk-reward in this phase.
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