Despite the growing competition from custom chips like Google's TPU in the AI accelerator market, Bank of America (BofA) maintains a bullish stance on NVIDIA, Broadcom, and AMD, citing the rapid expansion of the AI data center market and the enduring advantages of GPUs.

BofA forecasts that the total addressable market (TAM) for AI data centers will grow fivefold to over $1.2 trillion by 2030. Even if NVIDIA's market share declines from 85% to 75%, its absolute earnings are expected to surge. The bank highlights that GPUs remain irreplaceable in public cloud and enterprise markets, reinforcing its "Buy" ratings on NVIDIA, Broadcom, and AMD, as current valuations do not fully reflect their long-term profitability.

On November 27, reports indicated that Google is expanding its custom chip ecosystem by leasing TPUs to Meta, posing a theoretical challenge to NVIDIA and AMD. However, BofA analyst Vivek Arya emphasized that custom chips are primarily suited for companies like Google and Meta with large-scale internal workloads, while GPUs retain critical advantages in flexibility and broader market applicability.

BofA projects NVIDIA's earnings per share (EPS) to exceed $10 by 2027 and surpass $20 by 2030. The bank maintains a $275 price target for NVIDIA, trading at just 25x earnings, which it considers undervalued given its 40%+ sales and EPS growth potential.

Broadcom is seen as a major beneficiary of the custom chip trend, with a $400 price target (37x 2026 P/E). BofA expects its AI revenue to double year-over-year in 2026, driven by additional TPU and Anthropic projects. However, analysts caution that direct TPU licensing by Google could limit Broadcom's ASIC opportunities.

AMD, NVIDIA's key competitor, also holds a "Buy" rating with a $300 target (32x 2027 P/E), reflecting growth potential in CPUs, GPUs, and embedded markets despite cyclical risks.

As of the latest close, NVIDIA, Broadcom, and AMD traded at $180.33, $397.57, and $214.24, respectively.