Key Points
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Broadcom shares fell on Aug. 19 after Marvell announced an expanded custom chip agreement with Google, which designs TPU chips that Broadcom develops.
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In January 2023, Bloomberg reported Apple would phase out a key Broadcom chip, yet Broadcom’s revenue nearly doubled over the subsequent two fiscal years.
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Apple represented roughly 20% of Broadcom’s net revenue in fiscal 2023, per the company’s annual filing.
Marvell Technology (NASDAQ:MRVL) disclosed an expanded custom chip agreement with Google on Aug. 19, including a warrant tied to up to $120 billion in future purchases—a development that impacted Broadcom (NASDAQ:AVGO) shares, which dropped about 5% that day.
The sell-off reflected investor concerns about Broadcom’s position in Google’s AI chip strategy, as the tech giant strengthens ties with its primary competitor in custom silicon design.
However, Google has not exited Broadcom’s ecosystem. The company secured a long-term agreement in April to develop future TPU generations and supply components through 2031, suggesting a multi-partner strategy rather than a complete transition.
Image source: The Motley Fool.
Selective Market Reaction
Chip stocks reacted unevenly on Aug. 19, with AMD down 4% and Nvidia nearly flat, while Marvell rose 8%. Broadcom’s decline reflected concerns about Google’s AI strategy rather than sector-wide weakness.
Despite the partnership expansion with Marvell, Google continues its work with Broadcom, underscoring the complexity of large-scale chip procurement decisions.
The Apple Precedent
A similar scenario unfolded in January 2023 when Bloomberg reported Apple would replace a Broadcom wireless chip by 2025. While Apple did transition to its own N1 chip by 2025, it simultaneously extended a $7 billion annual deal for Broadcom’s 5G components, ultimately broadening the partnership.
Broadcom’s revenue more than doubled from $35.8 billion in fiscal 2023 to $63.9 billion in fiscal 2025, driven by surging AI chip demand. The stock rose over 500% since the initial Apple report, highlighting the resilience of Broadcom’s portfolio.
AI Sector Risks Loom Larger
Unlike the wireless chip transition, the current AI-focused shift carries greater growth implications. Broadcom’s AI semiconductor revenue reached $10.8 billion in Q2 2026, a 143% year-over-year increase, as total revenue rose 48% to $22.2 billion. Earnings guidance for Q3 2026 targets $16 billion in AI revenue, up over 200%.
While Google’s contribution to Broadcom’s AI business remains undisclosed, its significant role in the company’s top five customers (accounting for 40% of revenue) means strategic shifts could impact growth trajectories investors prioritize.
At roughly 60 times earnings and 27% below its 52-week high, Broadcom’s valuation warrants scrutiny. Historical precedents suggest customer transitions unfold over years, not days, with AI revenue trends playing a decisive role in determining outcomes.
*Stock Advisor returns as of August 23, 2026.
Daniel Sparks and his clients have positions in Apple. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Apple, Broadcom, Marvell Technology, and Nvidia. The Motley Fool has a disclosure policy.