MediaTek Stock Soars on Google AI Partnership Amid Mixed Business Outlook

MediaTek shares are poised for their strongest weekly performance in over a decade, fueled by Google's advancements in artificial intelligence. The Taiwanese chipmaker's stock rallied for five consecutive days, culminating in a 20% weekly gain as investors cheered its collaboration with Alphabet on tensor processing units (TPUs) - potential rivals to Nvidia's AI chips.

While the Google deal provides momentum, MediaTek faces persistent challenges. Morgan Stanley analysts highlight ongoing struggles in the Chinese market and margin pressures from intense competition. The firm's smartphone business remains under pressure, though AI-related revenue could offset these headwinds. UBS has nearly doubled its 2027 TPU sales forecast for MediaTek to $4 billion, signaling growing confidence in the AI opportunity.

The stock upgrade from Morgan Stanley reflects cautious optimism, yet MediaTek shares remain slightly negative year-to-date. This divergence underscores the market's bet on AI-driven growth outweighing near-term business pressures in traditional segments.