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Alphabet Inc. (GOOGL) is expanding its custom artificial intelligence chip supply chain through a new partnership with AI networking chipmaker Marvell Technology, Inc. (MRVL). The agreement strengthens Marvell’s market position while raising questions about Broadcom Inc.’s (AVGO) role as a primary supplier. This development prompts a critical evaluation: does the deal make Marvell a more compelling AI investment than Broadcom?

Google’s Marvell Deal Challenges AVGO’s AI Chip Dominance

For years, Alphabet-owned Google and other enterprise leaders have developed custom AI chips to secure cost-effective alternatives to NVIDIA Corporation’s (NVDA) advanced processors. Historically, Google has relied primarily on Broadcom for these custom designs. In April, Broadcom confirmed an extended partnership with Google through 2031, under which it will supply tensor processing units (TPUs) and networking equipment.

However, Google has recently shifted toward a broader supplier strategy by partnering with Marvell on TPUs, including accelerators, storage solutions, and network interface controllers. Under the terms of the agreement, Marvell holds warrants allowing it to sell up to $12.2 billion in shares to Google. This partnership expands Marvell’s hyperscaler customer base, bolsters long-term growth prospects, and aligns Google’s strategic interests with Marvell’s expansion goals. It also solidifies Marvell’s status as a key supplier of custom AI silicon to hyperscalers—a position the company has actively pursued for years.

Importantly, this arrangement does not signal Google’s departure from Broadcom. Rather, it reflects a deliberate effort to diversify its custom-chip supply chain. Nevertheless, the deal could reduce Broadcom’s share of future AI-chip expenditures, potentially impacting its revenue trajectory and introducing direct competitive pressure.

After Google’s Deal, Is Marvell a Better Buy Than Broadcom?

Google’s move to diversify its custom AI-chip supply chain has reinforced Marvell’s standing as a critical supplier to hyperscalers while presenting a tangible competitive challenge to Broadcom. Broadcom remains heavily reliant on AI-related capital expenditure, and its concentrated customer base leaves it exposed to potential slowdowns in AI infrastructure investment or softer demand from major cloud providers.

Market reaction underscored these dynamics: Broadcom’s shares declined approximately 5% on Wednesday amid investor concerns over its shifting relationship with Google, while Marvell’s stock surged more than 9% as the deal elevated its role in the rapidly expanding AI-chip sector. Financially, Broadcom carries a debt-to-equity ratio of 71.5%, significantly higher than Marvell’s 27.2%, indicating greater leverage and potentially elevated downside risk in a deteriorating economic environment.

Considering these factors, Marvell emerges as the more attractive investment following Google’s announcement, positioning the company for sustained growth as demand for custom AI silicon continues to accelerate. Accordingly, Marvell’s expected earnings growth rate for the current year stands at 42.3%. The Zacks Consensus Estimate projects earnings per share of $4.05 for MRVL, representing a 19.8% year-over-year increase.

Marvell currently holds a Zacks Rank #2 (Buy). A complete list of today’s Zacks Rank #1 (Strong Buy) stocks is available here.

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Marvell Technology, Inc. (MRVL)

Broadcom Inc. (AVGO)

NVIDIA Corporation (NVDA)

Alphabet Inc. (GOOGL)

This article originally published on Zacks Investment Research (zacks.com).