Our Take on Marvell as Broadcom Report Weighs on the Stock

Shares of Marvell (MRVL) are under pressure Monday following a report by The Information that Microsoft (MSFT) is in talks with Broadcom (AVGO) for a custom AI chip collaboration. Both companies, Broadcom and Marvell, are vying for the custom AI chip business as demand for AI chips surges, and buyers of those chips look to diversify their supplier base even as demand for Nvidia’s (NVDA) chips remains robust.

Before we dig into things, let’s remember The Information recently ran the article “Microsoft Lowers Sales Staff’s Growth Targets For Newer AI Software” that weighed on Microsoft shares last week. Microsoft refuted the article, taking that pressure off the stock. So, let’s stick to the facts and data and not fall prey to click-driven headlines.

During Marvell’s earnings call last week, management said its custom AI silicon business was around one-quarter of its overall data center revenue, which pegs it at around 18% of Marvell’s total revenue stream for the October 2025 quarter. That business has been linked to program wins with Amazon (AMZN) , Microsoft, Meta (META) , and Alphabet (GOOGL) , and Marvell management noted back in June that it has more than 50 additional pipeline opportunities after having won 18 with U.S. hyperscalers and emerging ones.

For next year, Marvell said that based on existing purchase orders, it sees that business growing at least 20%, accelerating the year after as “several high-volume customer designs in development with meaningful revenue expected from these programs” hit. Meta is expected to be behind that ramp in calendar 2027, and that “at least 20%” forecast for next year is higher than before.

Last week, Marvell also said its Interconnect business, which is ~50% of its data center business (37% of total revenue), should grow faster than the more than 30% year-over-year growth forecast for overall cloud capex spending levels next year. As a reminder, Marvell's Interconnect business focuses on providing high-speed electrical and optical semiconductor solutions that connect the various components within and between data centers, particularly for demanding AI and cloud computing workloads. This is also the business that stands to benefit from its pending acquisition of Celestial AI we discussed last week.

In our experience, not every program win matriculates into a revenue-generating project, and that is potentially what we are seeing with some future AI custom chip business with Microsoft. However, we also know these projects tend to have very long lead times, which means conversations today likely won’t have an impact until 2027 or 2028. If Marvell had all of its custom AI chip pipeline in just the Microsoft basket, this would be far more concerning to us, but it doesn’t. And while the custom AI chip business is a growth area for Marvell, it isn’t the largest one or the fastest growing one inside its data-center business.

Make no mistake, we are not downplaying this report by The Information, but given the context, Marvell’s guidance, and its pending Celestial AI acquisition, the impact isn’t likely to materially damage current expectations. There is also potential that this is once again a clickbait-driven headline.

Near-term, MRVL shares could be volatile, especially given the aggregate run they’ve had from the low $60s back in September. Odds are today’s headlines will flush out some of the momentum investors, and that’s just fine with us. As we think about this, and where we are in AI adoption, usage and buildout, we believe we are still in a rising tide lifts multiple boats scenario.

We expect we’ll get much more on this when Marvell management presents at the Barclays 23rd Annual Global Technology Conference on Wednesday (December 10) at 2 PM EST. We’ll be listening intently even as we get ready for Fed Chair Powell’s post-Fed policy presser. Should we see some material change compared to the guidance discussed last week, we’ll evaluate as needed and keep our emotions in check as we do that.

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At the time of publication, TheStreet Pro Portfolio was long MRVL, NVDA, META, MSFT, AMZN and GOOGL.