Broadcom shares held steady while AMD eased following news of Google’s custom silicon deal with Marvell, highlighting shifting dynamics in AI networking and ASIC procurement.
Shares of Broadcom (NASDAQ:AVGO) opened slightly in the green at $364.14 during early Thursday trading, stabilizing following Wednesday’s selloff triggered by a custom-chip announcement from Alphabet’s (NASDAQ:GOOGL) Google. While the Invesco QQQ Trust (NASDAQ:QQQ) declined 0.7% to $710.90, the iShares Semiconductor ETF (NASDAQ:SOXX) remained essentially flat at $517.27, signaling that Tuesday’s chip-sector weakness was not broad-based. Intel (NASDAQ:INTC) fell 1% to $91.73, and Advanced Micro Devices (NASDAQ:AMD) dropped 1% to $463.15, reflecting sympathy selling across large-cap semiconductor names. The muted ETF response underscores a rotational shift between two custom-silicon suppliers rather than a sector-wide pullback.
The catalyst was Google’s expanded custom-chip partnership with Marvell Technology (NASDAQ:MRVL), announced Wednesday. The agreement includes warrants to purchase up to $12.2 billion in Marvell stock, structurally binding the two companies across custom XPU and networking initiatives. This equity-linked framework elevates a standard commercial supplier relationship into a strategic alliance. Consequently, Marvell shares surged 10% on Wednesday to $237.27, as traders interpreted the arrangement as a direct competitive threat to Broadcom’s TPU franchise. Broadcom faced immediate selling pressure as investors reassessed how much of Google’s custom-silicon supply chain remains under the incumbent’s control.
Despite the short-term volatility, Broadcom is not being displaced. CEO Hock Tan has guided third-quarter FY2026 AI semiconductor revenue to $16 billion, representing year-over-year growth exceeding 200%. The company reported $10.8 billion in AI semiconductor revenue for Q2 FY2026, a 143% increase year over year, and management has reaffirmed its target of generating more than $100 billion in AI semiconductor revenue for fiscal 2027.
Wednesday’s market reaction highlights a shifting narrative. Google has long been viewed as Broadcom’s anchor TPU customer, and any indication of supply-chain diversification alters how Wall Street values that revenue stream. While the Google-Marvell terms preserve Broadcom’s existing TPU commitments, they effectively reset the ceiling on the proportion of Google’s future custom-silicon expenditure that will flow through a single vendor.
Institutional positioning reflected this dynamic. ARK Invest acquired 55,548 shares of Broadcom on Wednesday while trimming its position in Advanced Micro Devices, signaling that Cathie Wood’s investment team treated the dip as an entry opportunity rather than a warning sign. With a market capitalization of $1.72 trillion, Broadcom maintains a scale advantage within the custom-silicon peer group that Marvell has yet to match.
The bull case for Broadcom rests on multi-generation hyperscaler commitments and a comprehensive networking portfolio encompassing Tomahawk switches, DSPs, and optical components. During the June earnings call, management noted that order visibility now extends through 2028, providing a solid foundation for the fiscal 2027 revenue target. Conversely, Wednesday’s price action exposed the counter-argument: Broadcom’s stock remains highly sensitive to individual customer decisions because a disproportionate share of its AI revenue depends on a limited pool of hyperscale buyers, each capable of distributing procurement across competing vendors.
Through Wednesday’s close, Broadcom stock had gained 5% year to date, compared to Marvell’s 180% advance and the iShares Semiconductor ETF’s 73% rise over the same period. Among other large-cap semiconductor names, Intel was up 151%, AMD up 118%, and Google up 10% YTD. This performance gap contextualizes today’s trading activity. Broadcom has trailed the broader sector for months, meaning a rotation-driven shift toward a rival custom-silicon supplier carries more psychological weight than it would for a stock that had already participated in the rally. Marvell’s 180% YTD run likely prices in substantial custom-silicon optimism, whereas Broadcom continues to trade closer to its historical valuation baseline.
Traders will monitor whether Broadcom holds the $364 support level throughout the session and whether SOXX remains flat, which would validate the rotation thesis rather than signal a broader semiconductor de-rating. Investors may also track whether sell-side analysts adjust their TPU market-share assumptions following the public disclosure of the Google-Marvell terms.
Position sizing remains critical given Broadcom’s exposure profile. A single hyperscaler decision moved AVGO shares 5% in one session, illustrating the concentration risk inherent to custom-silicon suppliers reliant on a narrow buyer base. Investors establishing new positions should view AVGO as a high-beta AI infrastructure holding whose next valuation inflection will likely depend on subsequent major customer announcements rather than macro sector trends.
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