AI Infrastructure Plays: Why TSM and Broadcom May Outpace the Magnificent Seven

While the 'Magnificent Seven' have dominated the AI narrative, strategic opportunities are emerging in the underlying hardware layer, specifically within the semiconductor foundry and custom silicon markets. Taiwan Semiconductor Manufacturing Co. (TSM) and Broadcom (AVGO) are identified as high-upside alternatives due to their indispensable roles in the AI supply chain. TSM serves as the primary manufacturer for industry leaders including Nvidia and Apple. Because it operates as a foundry rather than a designer, it captures value from competing chip designers. Management expects AI chip revenue to increase at a compound annual growth rate (CAGR) in the mid- to high-50% range from 2024 through 2029, with overall revenue growth projected at approximately 25%. Broadcom is carving a niche by partnering with AI hyperscalers to design custom AI chips tailored to specific workloads, such as Google's Tensor Processing Unit. This approach offers superior cost-effectiveness compared to general-purpose GPUs in certain applications. Financial data highlights Broadcom's rapid scaling; in the first quarter ending February 1, 2026, its custom AI chip division generated $8.4 billion, representing an annual run rate of nearly $34 billion. The company expects annual sales from custom AI chips alone to exceed $100 billion by the end of 2027. This trajectory suggests these infrastructure providers may offer superior growth prospects compared to the broader mega-cap tech cohort.