Is Broadcom in Trouble Now That Alphabet Is Getting Chips From Marvell Too?

AVGO fell more than 10% after GOOGL announced an expanded partnership with MRVL for custom AI chip design. The move mirrors META's multi-vendor GPU strategy and marks GOOGL's broader diversification in AI silicon sourcing beyond AVGO's application-specific integrated circuits (ASICs).

AVGO remains the dominant player in custom AI chip design. Its AI revenue segment posted 143% year-over-year growth, and management projects more than a tripling of that revenue in the next quarter. The company's core business shows no immediate fundamental weakness despite the headline risk from GOOGL adding MRVL as a supplier.

The partnership announcement doesn't signal reduced AVGO orders. Hyperscalers routinely work with multiple chip vendors to manage supply risk and optimize workload distribution. GOOGL's decision to bring MRVL into its supply chain expands capacity rather than replaces existing relationships.

Market reaction to the news created a gap between AVGO's stock performance and its underlying business trajectory. The sell-off reflects near-term sentiment more than structural change in the custom AI chip market.