Broadcom AVGO +4.70% ▲ and Marvell Technology MRVL +32.52% ▲ are both seen as big winners from AI, but they are not the same kind of company. Broadcom is the larger, more diversified business. It makes AI chips, networking chips, wireless chips, storage products, and owns VMware, which gives it a large software business. Meanwhile, Marvell is more focused on the fast-growing segments of AI infrastructure, especially custom chips and data center networking. Nevertheless, analysts currently seem to prefer AVGO stock.
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Broadcom Is More Diversified
Broadcom’s biggest advantage is that it is not only an AI chip story. This matters because investors are not relying on a single product line to support the entire valuation. Although the AI business is clearly the biggest growth driver, especially custom silicon and networking for hyperscalers, VMware gives Broadcom a large, high-margin software revenue stream that can support cash flow even if semiconductor demand becomes more cyclical.
This wider business mix is why Broadcom may be the easier stock to own from a risk-adjusted perspective. However, the key risk is that expectations are already high, especially when it comes to demand for custom AI chips. Still, Broadcom’s scale, profitability, and recurring software revenue make the thesis less dependent on a single customer or a single announcement.
Marvell Has the More Exciting Near-Term Momentum Story
In contrast, Marvell has the more exciting near-term momentum story. The company is deeply tied to AI data center buildouts through custom silicon, optical connectivity, networking, and data infrastructure chips. That is why Jensen Huang’s recent comments, in which the Nvidia NVDA -0.69% ▼ CEO called Marvell the next “trillion-dollar company,” helped Marvell shares surge by more than 27% at the time of writing. Interestingly, Nvidia invested $2 billion in Marvell earlier this year, and Marvell has forecast that its custom chip revenue could exceed $10 billion by Fiscal 2029.
The bullish case for Marvell is that AI infrastructure is becoming more about full systems, not just GPUs. As AI data centers become larger, companies need faster networking, better connectivity, lower power consumption, and more customized chips. That plays directly into Marvell’s strengths. However, Marvell is also the riskier stock because the valuation is more dependent on future AI growth materializing. In addition, the stock’s surge after Huang’s comments adds to the momentum, but it also means that investors are paying more for the story.
Wall Street’s Take
Turning to Wall Street, out of the two stocks mentioned above, analysts think that AVGO stock has less downside risk than MRVL. In fact, AVGO’s price target of $480.59 per share implies less than 1% downside versus MRVL’s 18% downside risk. Interestingly, though, analysts still have Strong Buy ratings on both stocks.
