Broadcom shares extended their slide on Wednesday after Marvell Technology announced a custom AI chip development agreement with Google, giving Alphabet's unit an option to acquire up to $12.2 billion of Marvell shares. Marvell jumped about 7% at the open, while Broadcom fell roughly 5%, as the deal reignited concerns that Google may diversify away from Broadcom as its main custom chip partner.
Broadcom closed Tuesday at $380, down about 21% from its June 2 record close of $481.57. The stock has been under pressure since fiscal second-quarter results failed to clear Wall Street's exceptionally high bar. Revenue rose 48% year over year to a record $22.2 billion, while AI semiconductor revenue jumped 143% to $10.8 billion. Chief Executive Hock Tan said AI semiconductor sales should reach $16 billion in the third quarter, but analysts had expected about $17.2 billion; Broadcom also reiterated its fiscal 2027 target of more than $100 billion, below the roughly $114 billion some models anticipated.
The Marvell-Google agreement does not necessarily displace Broadcom, which signed a long-term agreement with Google in April to develop and supply future generations of custom AI chips and components through 2031. Broadcom has said it has a $73 billion AI backlog spanning XPUs, switches, digital signal processors and optical components, with deliveries expected over the next 18 months. Its six core custom chip customers include Anthropic, Google, Meta and OpenAI.
Analyst views remain divided. Nova Capital values Broadcom at $585.90, implying about 54% upside. JPMorgan reiterated an Overweight rating and $580 target, saying Broadcom remains on track to ramp Google's TPU v9 program in 2028 and calling investors 'aggressive buyers' after the June decline. Cantor Fitzgerald kept an Overweight rating and $525 target. Macquarie, however, downgraded Broadcom to Neutral with a $437 target, expecting Broadcom's share of Google's business to decline meaningfully in 2027 and 2028 as Google works with MediaTek and builds in-house capabilities.
