UBS Models 6.76M TPU Shipments From Broadcom in 2027; AI Capex Acceleration Pressures Semiconductor Valuations

The AI infrastructure supercycle is accelerating faster than expected, but rising rates and valuation pressures are creating headwinds for semiconductor leaders. UBS models that Broadcom will ship 6.76 million TPUs (Tensor Processing Units) in 2027, reflecting Google's commitment to AI chip proliferation and the broader data-center gold rush. NVIDIA CEO Jensen Huang warned that AI demand may outpace semiconductor supply for years, signalling the supply crunch extends well beyond 2026.

Williams CEO stated that US natural gas demand will rise over the next decade more than it did in the past 15 years, driven entirely by data-center power needs for AI workloads. This is tangible confirmation that the capex acceleration is real: utilities are scrambling to secure power supply, as evidenced by NextEra's $67 billion acquisition of Dominion to consolidate energy assets. The energy squeeze and capex intensity are now top-of-mind risks for every AI infrastructure player.

Semiconductor valuations are under pressure despite demand strength. As Treasury yields climb above 4.6%, the present value of near-term capex investments declines while financing costs rise. Broadcom, NVIDIA, and AMD face a paradox: orders are strong, but the cost of capital to build capacity has jumped sharply. Investors are repricing semiconductor stocks downward as the cycle becomes more capital-intensive and the competitive dynamics shift toward supply abundance rather than scarcity.

The narrative is shifting from "supply crunch" to "capex discipline." Wall Street is watching whether chipmakers can maintain margins as utilisation swings higher and competition intensifies. The risk is that over-investment in AI chips leads to a 2018-style glut, eroding pricing power for AVGO, NVDA, and AMD. The debate hinges on whether demand truly outpaces supply for years, or if the capex cycle peaks sooner than consensus expects.