Broadcom stock has a record - its customer could be Microsoft. What about its competitor's stock
Broadcom's market value has jumped more than 70% this year, and analysts still see little upside potential
Broadcom shares hit an all-time high in trading on Monday, December 8. Investors reacted to a report by insider publication The Information that Broadcom is in talks with Microsoft to supply custom AI chips. The potential deal could deal a blow to Marvell Technology, which is now developing such chips for Microsoft, Barron's noted. Marvell's shares collapsed 7% in Monday's main trading.
Details
Shares of contract microprocessor maker Broadcom rose 2.8% to $401.1 on Dec. 8, their new record high.
The growth was triggered by The Information's publication that the company was in talks with Microsoft about a new contract for the production of AI chips. This was another sign that Broadcom's custom processors are in high demand in the field of artificial intelligence and are competing with Nvidia's universal chips, long considered the gold standard for processing AI tasks, CNBC writes .
Information about a possible new Broadcom customer comes amid the success of Google's Tensor Processing Units (TPUs), which were created in cooperation with the chipmaker. Google's last major AI model, the Gemini 3, which received rave reviews from analysts, was trained and runs entirely on such custom TPUs.
Since the beginning of the year, Broadcom securities have risen 73%. On Thursday, December 11, the company is scheduled to release its report for the fourth quarter and the entire fiscal year 2025.
What's up with Marvell stock
Shares of Marvell Technology collapsed in trading on December 8 by 7% to $92, and then lost about 0.9% more in the postmarket. In addition to the publication by The Information that the chipmaker's client began negotiations with a competitor, the quotes were affected by a downgrade from Benchmark.
Benchmark Equity Research analyst Cody Acri dropped his recommendation to buy Marvell's securities, downgrading them to Neutral and withdrawing his target price, Barron's reports. The analyst suggested that the chipmaker has failed to secure new contracts with Amazon to produce AI chips. He drew this conclusion from Marvell's forecast announced last week. The company gave an optimistic estimate for revenue growth in its data center semiconductor segment for the next two fiscal years, but Akri believes that estimate only takes into account the continuation of its previous contract with Amazon - to produce Trainium 2 chips - rather than indicating new ones.
"We are now virtually certain that the company has lost the competition for Amazon's Trainium 3 and 4 projects to Taiwan's Alchip," a Benchmark analyst wrote in a note to clients, though he acknowledged that his conclusion is debatable.
In contrast, analyst Harlan Suhr of JPMorgan interpreted Marvell's outlook as evidence of a winning bid for Trainium 4, Barron's reports. The bank reiterated a buy recommendation on the company's shares and raised its target price from $120 to $130, up 41% from Monday's close.
Marvell's market value is down nearly 17% this year.
What Wall Street thinks about the stocks of two companies
According to MarketWatch, 46 out of 51 analysts recommend buying Broadcom shares, while another five recommend holding in a portfolio. Wall Street's consensus price target shows expectations of a 5% increase in the value of the securities from Monday's closing level.
Marvell doesn't have a bearish rating either . Of the 44 analysts tracking its stock, 33 of them recommend buying it, while the rest are neutral. The average target suggests a potential upside of 28% from the current price.
This article was AI-translated and verified by a human editor
