Broadcom's stock fell more than 5% after Marvell Technology won a major partnership to supply custom AI chips to Google, signaling that Google is diversifying its chip suppliers rather than relying solely on Broadcom.
Although Broadcom remains Google's principal TPU partner through 2031 and benefits from a rapidly expanding AI infrastructure market—Google is planning as much as $205 billion of 2026 AI-related capital spending—the deal raises questions about whether Broadcom's share of Google's future custom-silicon spending could decline if Marvell captures progressively larger programs.
What happened
Broadcom shares fell more than 5% Wednesday after Marvell Technology secured a major custom-chip partnership with Google involving a warrant to purchase as many as 58.97 million Marvell shares at $206.58 each, creating about $12.2 billion of equity value. Marvell rallied roughly 10% on the deal, and the warrant structure vests in tranches linked to every $500 million of qualifying product purchases.
Why it matters
Broadcom has dominated Google's AI accelerator chip business, but Marvell's deal signals Google is diversifying suppliers rather than relying on Broadcom alone. Although Broadcom retains its principal agreement with Google through 2031, the shift suggests potential erosion of Broadcom's market share in an area that has become critical to its business—AI semiconductor revenue rose 70% year over year to $10 billion in its fiscal second quarter.
What to watch
Broadcom's fiscal third-quarter earnings on September 2 will be crucial; investors should focus on AI semiconductor revenue growth, customer concentration, custom-accelerator bookings, and margins. The earnings call will help clarify whether Marvell is capturing large portions of Google's Tensor Processing Unit roadmap or whether both suppliers can grow as Google's AI infrastructure spending expands.
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Broadcom's near-term decline reflects investor concern that Google's move to add Marvell as a supplier signals the end of a monopoly-like position in Google's custom AI chip procurement. The article frames this as a diversification strategy by Google rather than a rejection of Broadcom, but the market's 5% drop suggests traders are pricing in the risk that Broadcom's share of Google's future spending could shrink faster than the overall market grows.
However, the body supplies several reasons to believe the sell-off may be overblown. Google's AI infrastructure capacity remains constrained, and the company is planning as much as $205 billion of 2026 AI-related capital spending—a scale large enough that multiple suppliers can grow in absolute terms even if Broadcom's share declines. The warrant structure, which vests based on product purchase thresholds, directly incentivizes Google to expand business with Marvell, but it does not automatically reduce orders from Broadcom. The September 2 earnings call, where investors will scrutinize AI semiconductor revenue growth and custom-accelerator bookings, will be the critical test of whether Marvell is truly capturing large TPU programs or whether Broadcom's 70% year-over-year growth in AI revenue can persist.
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