Broadcom Leads Marvell in Custom AI Chip Rush

Custom AI chips are gaining popularity as they offer superior cost performance to traditional GPU-based training. Broadcom and Marvell Technology, both leaders in producing networking equipment for data centers, have launched custom AI chip businesses with a few critical customers.

Broadcom boasts Alphabet, Meta Platforms, OpenAI, and Anthropic as clients, while Marvell has captured Amazon and Microsoft. These companies are either using custom AI chips internally or renting them out to clients, and are expected to ramp up purchasing of custom chips over the next few years.

Looking at how the stocks are valued using next year's earnings projections, Broadcom is trading at about half the price Marvell is. Broadcom is also expected to grow faster, with an average Wall Street analyst expecting 64% revenue growth for the company in fiscal year 2027, compared to Marvell's estimated 45% growth.

Given its lower price tag and faster growth prospects, Broadcom appears to be a more attractive investment opportunity than Marvell. The custom AI chip market is expected to grow significantly over the next few years, making both stocks potential beneficiaries.