Analyst sees chip and networking winners from Google's spending

what happened

According to Newsmetry API, citing MarketWatch, Melius Research analyst Ben Reitzes believes the strongest beneficiaries of Google Cloud's expansion could be chipmakers and networking suppliers rather than Alphabet itself. Melius expects Alphabet's infrastructure spending to rise 75% to $352 billion in 2027 as the company expands processing capacity for artificial-intelligence models.

Reitzes kept a hold rating on Alphabet but took a more bullish view of Broadcom, Marvell Technology and Arista Networks. He expects another strong quarter for Google Cloud at the end of October and says continued growth will require Alphabet to spend more on its models and cloud capacity. His price targets are $610 for Broadcom, $445 for Marvell and $275 for Arista.

Broadcom designs Google's custom tensor-processing-unit chips. Although its shares are down 27% from their highs earlier this year amid concerns that Google is adding other TPU suppliers, Melius expects Broadcom's custom-chip revenue from Google to keep growing through 2031. The company could also gain business from OpenAI and Anthropic. In August, Marvell and Google partnered to co-design custom silicon products, while Google received a warrant to buy up to $12.2 billion of Marvell shares.

Arista supplies the high-speed networking switches and software that connect chips and has secured Google and Anthropic as major customers. Reitzes said it could be the biggest beneficiary under his coverage if Google's spending exceeds expectations. JPMorgan analyst Harlan Sur also identified Marvell and Broadcom as his top semiconductor picks.

why it matters

The report points to a broader market impact from Alphabet's AI buildout: higher spending could support demand for custom processors and data-center networking equipment. The outlook remains tied to Google's actual investment plans and supplier decisions.

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