Broadcom Faces New Competition as Alphabet Expands Marvell AI Chip Partnership

Key Points

• After Alphabet announced an expanded long‑term partnership with Marvell Technologies, Broadcom’s shares slipped.

• Broadcom continues to lead the market for application‑specific integrated circuits by a wide margin.

• Management forecasts strong revenue growth, making the recent sell‑off particularly surprising.

Broadcom (NASDAQ: AVGO) shares have fallen more than 10% over the past two weeks, a move tied to Alphabet’s (NASDAQ: GOOG, GOOGL) decision to broaden its AI chip partnership with Marvell (NASDAQ: MRVL). The expanded collaboration has sparked worries that Broadcom could lose ground or encounter pricing pressure.

Nevertheless, investors need not panic. Although the deepening Marvell‑Alphabet tie‑up signals rising competition in the AI chip arena, the overall market is expanding and Broadcom still holds the top spot in custom AI chips.

Image source: Getty Images.

Broadcom is the Nvidia of ASICs

While calling a firm the “Nvidia of its sector” has become a popular shorthand, the description fits Broadcom well. The analogy also helps put Alphabet’s expanded Marvell partnership into perspective.

Nvidia dominates the graphics processing unit (GPU) market, supplying flexible and powerful parallel processors.

Broadcom leads in the design of application‑specific integrated circuits (ASICs), which are tailored to handle specific AI workloads. Both companies boast market capitalizations exceeding $1 trillion and are experiencing rapid revenue growth driven by the AI infrastructure boom, with existing customers seeking even greater volumes.

Although AMD (NASDAQ: AMD) also offers GPUs, it trails far behind Nvidia. Nvidia’s sales growth outpaces AMD’s, its market cap is nearly seven times larger, and it generates more revenue in a single quarter than AMD does in about two years.

While AMD remains a strong competitor, the GPU divide between it and Nvidia is huge. Likewise, Marvell holds a comparable stance versus Broadcom, yet Broadcom continues to outpace Marvell in growth and produces more revenue in one quarter than Marvell does in two years.

Alphabet can work with multiple chipmakers

Alphabet continues to purchase substantial numbers of Nvidia GPUs while relying on Broadcom for its custom chips, known as Tensor Processing Units (TPUs). The parent company of Google is expected to maintain relationships with both suppliers for the foreseeable future, as there is little reason to disrupt a working arrangement.

The widened Marvell partnership reflects Alphabet’s openness to experimentation and a strategy to diversify supply when chip availability becomes constrained. For example, Meta Platforms sources GPUs from both Nvidia and AMD; deepening its AMD ties would not prompt an abrupt halt to Nvidia purchases. The same logic holds for Alphabet.

Earlier this year, Meta Platforms secured a long‑term chip supply agreement with AMD just days after finalizing a similar deal with Nvidia. With AI demand surging, Alphabet will require additional AI chips for its data centers. Having several ASIC suppliers is beneficial, though it does not imply a cutback in Broadcom orders.

Broadcom’s guidance still implies substantial growth for its AI chip business

While headlines capture short‑term attention, a company’s fundamentals reveal its true trajectory over time. Broadcom posted strong results for its fiscal 2026 second quarter, with total revenue up 48% year‑over‑year. Upbeat guidance for its AI chip business energized investors, making the recent Marvell development appear relatively minor.

The company’s AI semiconductor segment surged 143% year‑over‑year, now representing nearly half of total sales. This outperformance exceeded earlier guidance, a noteworthy achievement given that CEO Hock Tan projects AI semiconductor revenue to more than triple in the fiscal 2026 third quarter.

Total revenue is forecast to reach $29.4 billion in that quarter, a sequential increase of over 30% and an 84% year‑over‑year rise. Despite Broadcom’s stock slipping more than 20% after its Q2 results, the disconnect between share price and improving fundamentals could signal a buying opportunity, particularly as the Marvell news deepens the recent dip.

Should you buy stock in Broadcom right now?

Investors should evaluate Broadcom’s prospects carefully before adding the stock to their portfolios.

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