Google AI deal sparks 20% weekly jump in MediaTek shares

MediaTek Inc. shares are on track for their strongest weekly performance in more than two decades, driven by renewed investor confidence following advances in artificial intelligence technology at key customer Google.

The rally underscores shifting expectations for the Taiwanese chipmaker, long reliant on smartphones, as it gains exposure to the fast-expanding AI hardware market.

Best week since 2002 as shares surge over 20%

The stock rose for a fifth consecutive session in Taipei on Friday by 4%, pushing its weekly gain above 20%.

The surge marks MediaTek’s best week since 2002, fueled by enthusiasm surrounding Google’s latest Gemini AI model and reported collaboration between the two companies on tensor processing unit (TPU) design.

MediaTek, historically focused on smartphone chipsets, has faced uncertain demand trends and pressure on profitability due to rising development expenses and intense competition.

Despite this week’s rally, shares remain about 3% only in the year.

However, the market reaction suggests confidence that AI-related growth could offset weakness in traditional product categories.

Analysts boost forecasts on TPU momentum

Morgan Stanley analysts Charlie Chan and Daniel Yen upgraded MediaTek to overweight from equal-weight, noting that AI upside could help counter challenges in the smartphone market heading into next year.

While business conditions in China remain difficult, they believe Google’s TPU development could provide a longer-term earnings buffer.

The shift in the AI landscape has played a key role in this outlook. Earlier AI infrastructure revolved around training large language models, a domain largely dominated by Nvidia’s graphics processing units.

As industry focus turns to inference, the process of generating real-time responses to user prompts, application-specific integrated circuits such as TPUs are gaining prominence.

UBS analysts led by Sunny Lin raised their 2027 revenue forecast for MediaTek’s TPU-related contribution to $4 billion, up from $1.8 billion.

They estimate the business could account for 20% of operating profit by 2028, though execution from both MediaTek and Google will be crucial.

This week’s excitement was further boosted by reports that Meta Platforms Inc. is in discussions to adopt Google TPUs in its data centers starting in 2027.

UBS notes that MediaTek may benefit further if additional ASIC projects with Meta materialize.

Broader AI investment narrative strengthens

Sentiment across the sell-side remains broadly positive.

Of the analysts covering the firm, 23 rate the stock a buy, 10 recommend holding, and none assign a sell rating.

Consensus estimates indicate further upside, with price targets pointing to an additional 9% gain over the next year.

Macquarie analysts, including Arthur Lai, said they favor MediaTek and other Google-aligned partners over suppliers connected to Nvidia in future AI-led investment strategies.

They argue the current surge in AI development represents not speculative excess, but a structurally significant and capital-heavy build-out of new computing infrastructure.

MediaTek’s strong week suggests the market agrees.

While smartphone headwinds persist, the prospect of deeper integration into Google’s AI ecosystem — and potential expansion through Meta — has helped reset expectations.

Investors will now watch whether execution can match rising projections as demand for AI inference hardware accelerates.