Marvell's $12 billion Google warrant for custom AI chips threatens Broadcom's exclusive Google partnership through 2031, sending AVGO down 4%. AMD and NVDA have surged 126% and 18% YTD respectively, both outpacing AVGO's 10% gain despite Broadcom's 143% AI revenue growth. VMware security concerns and off-balance-sheet financing worries compound the selloff, with traders debating whether AVGO's pullback is structural or noise.
Act now: the analyst who called NVIDIA in 2010 just named his top 10 AI stocks — and Broadcom didn't make the cut. Grab the names FREE today. Broadcom (NASDAQ:AVGO) shares are down 5% to $359.66 in early Wednesday trading after Marvell Technology (NASDAQ:MRVL) landed a deal to help develop custom AI chips for Alphabet's (NASDAQ:GOOGL) Google.
The news directly pressures Broadcom's status as Google's incumbent custom silicon partner. The move caps a rough stretch for Broadcom stock, which closed Tuesday at $380. Even after a blockbuster year for AI infrastructure names, Broadcom shares have gained 10% year to date through Tuesday's close, a striking lag behind chip peers.
That divergence, and not the intraday drop alone, is the sharpest fact in Wednesday's action. Broadcom sits at the center of the AI infrastructure buildout, yet its stock has not participated in the peer rally. reported Wednesday that Marvell issued Google a warrant to buy a stake worth about $12.18 billion, tied to a deal to help develop custom chips. Marvell said it would develop AI inference accelerators, storage, networking and memory interface controllers, and near-memory computing technologies for Google.
Marvell stock is trading at $240.26, and reported shares jumped more than 11% in early Wednesday trading. Alphabet stock is down 0.7% to $341.96. The pressure on Broadcom traces back to April, when Broadcom signed a long-term agreement with Google to develop and supply future generations of custom AI chips and other components for Google's next-generation AI racks through 2031.
A Marvell foothold at the same customer threatens the exclusivity of that franchise, which is exactly why AVGO stock is under pressure. Demand for custom chips such as Google's tensor processing units has surged as businesses seek alternatives to expensive general-purpose graphics processors. Marvell Technology stock has run 155% year to date through Tuesday's close, a move driven by rising confidence in its custom silicon roadmap.
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