MediaTek Emerges as Top Shares Performer on Google's AI Chip Strategy

MediaTek’s remarkable rally this week marks the strongest weekly performance since 2002, with shares climbing more than 20% across five consecutive trading sessions in Taipei. What’s driving this surge? The market is betting on the Taiwanese chipmaker’s deepening collaboration with Google around artificial intelligence infrastructure—specifically, the design and production of tensor processing units (TPUs).

The Shift in AI Hardware Strategy

The industry is witnessing a fundamental pivot in how AI technology is deployed. While the initial wave of AI adoption concentrated on training massive language models through powerful GPUs—territory where Nvidia dominates—the focus is now shifting toward inference. This operational phase, where AI models process user queries, increasingly favors specialized processors like Google’s TPUs. MediaTek’s involvement in this next generation of chip design positions it as a potential beneficiary of this architectural transition.

Google’s TPU strategy extends beyond MediaTek itself. Reports suggest Meta Platforms is negotiating to deploy Google TPUs across its data centers by 2027, potentially creating a new revenue stream for MediaTek through additional ASIC development projects with Meta and comparable technology firms.

Wall Street’s Bullish Reassessment

The enthusiasm extends well beyond retail investors. Morgan Stanley upgraded MediaTek to overweight on Thursday, with analysts Charlie Chan and Daniel Yen noting that while China’s smartphone market faces continued pressure, the TPU opportunity should offset near-term headwinds over a longer horizon.

UBS analysts have recalibrated their forecasts aggressively. They now project MediaTek will capture $4 billion in TPU-related revenue by 2027—more than double their previous $1.8 billion estimate. Even more telling: TPUs could account for roughly 20% of MediaTek’s operating profit by 2028, contingent on successful execution from both MediaTek and Google.

The broader analyst consensus reflects this optimism. Among 23 buy recommendations, 10 holds, and zero sells, the median price target suggests approximately 9% additional upside ahead. Macquarie analysts have expressed a preference for MediaTek and similar Google partners over companies entrenched in Nvidia’s supply chain, characterizing the current AI infrastructure expansion as a foundational technology buildout rather than speculative excess.

Year-to-Date Context

Despite this week’s exceptional performance, MediaTek remains down roughly 2% since January—underscoring how concentrated this rally has been. The stock’s recent strength reflects a market recalibration: investors are factoring in structural growth from AI infrastructure investments that could define the semiconductor industry over the next several years.