Nvidia and Broadcom Shielded as AI Power Crunch Hits Chip Supply Chain
Nvidia and Broadcom appear relatively shielded from the escalating power crunch affecting US data centers, according to Morgan Stanley. While the brokerage predicts a 34% net power shortfall through 2028, equivalent to 32 GW, it suggests that the two chip giants are well-positioned to navigate the challenges. This outlook comes as the AI-driven boom in data-center investments clashes with growing electricity demands.
The AI boom has spurred billions in data-center spending, but the massive power requirements of generative AI are increasingly colliding with US power supply limitations. Both Morgan Stanley and Goldman Sachs have highlighted constraints on data-center expansion, though Goldman Sachs expects minimal near-term political pushback. Morgan Stanley, however, foresees labor, power, and political hurdles.
Despite these bottlenecks, Morgan Stanley does not believe the power crunch will jeopardize Nvidia or Broadcom's 2027 forecasts. The brokerage cites the companies' visibility into chip placement, geographic expansion, and coordination among data centers, semiconductor suppliers, and power providers. However, if chip capacity cannot be deployed, customers may delay deliveries or cancel orders, particularly impacting memory, optics, power-management, and analog components.