Broadcom (NASDAQ:AVGO) and Marvell (NASDAQ:MRVL) both help hyperscalers design specialized AI accelerators. Both are seen as major custom AI chip plays. But their stock prices tell a different story. Marvell shares have gained about 193% this year, while Broadcom has barely moved, with a year-to-date gain of roughly 2%.
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Broadcom
Broadcom is the larger company and the market leader in custom AI chips, also known as XPUs. Its major customers include Google, Meta, OpenAI and Anthropic. Broadcom’s custom accelerators allow these companies to run specific AI workloads at a lower cost and with better power efficiency than general-purpose GPUs.
The company also has a strong networking portfolio that includes Ethernet switches, optical connectivity and its new Tomahawk 7 switch. VMware gives Broadcom a recurring software business that Marvell does not have, although growth outside AI remains relatively weak.
Despite huge backlog and growth, the stock has gone nowhere this year. Jim Cramer recently expressed frustration over the market’s indifference to Broadcom’s leadership’s bullish outlook. See his commentary here.
Broadcom’s main risks are customer concentration and margin pressure. Custom chips carry lower gross margins than VMware software, so margins could decline as XPUs become a larger share of revenue. Broadcom also faces a possible threat in China, where authorities could encourage data centers to replace its switches with domestic products.
Marvell
Marvell is smaller but provides investors with more concentrated exposure to AI data centers. Its data-center revenue rose 46% in the second quarter. Marvell has a broad relationship with Amazon covering custom AI chips, optical processors, PCIe retimers, networking and switching products. Its expanded Google partnership includes accelerators, storage controllers, network interfaces and memory products connected to Google’s TPU ecosystem.
The biggest new risk is Qualcomm’s entry into Amazon’s custom silicon and optical ecosystem. Qualcomm may not replace Marvell, but it could receive part of future orders and create pricing pressure. Marvell also faces soft gross margins, tariff exposure through its reliance on TSMC and extremely high expectations after its stock rally.
Photo by Mohamed Hadji on Unsplash
Valuation and Verdict
Marvell trades at 62.2 times forward non-GAAP earnings, compared with 30.3 times for Broadcom. Marvell’s multiple is about 65% above its five-year average. Broadcom’s multiple is only around 11% above its historical average. Based on fiscal 2027 earnings estimates, Broadcom trades at an even lower 18 to 19 times earnings.
Marvell may offer greater upside if its Google and Amazon programs expand faster than expected. However, much of that optimism is already priced into the stock. Broadcom offers stronger margins, greater scale, more established customer relationships and a substantially lower valuation. At current prices, Broadcom looks like the better risk-adjusted bet, while Marvell appears more attractive after a meaningful pullback.
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