Broadcom Stock Plummets Amid Marvell-Alphabet Deal
Broadcom stock plummeted by as much as 5.9% after Marvell Technology announced a major deal with Alphabet, sparking fears that Broadcom was being supplanted by its rival.
The agreement between Marvell and Alphabet involves the development of custom semiconductors for artificial intelligence (AI) and related accessories. However, this news actually bolsters Broadcom's future prospects, not hurts them.
Just last April, Broadcom signed a five-year AI chip deal with Alphabet to develop and build upcoming versions of Google's Tensor Processing Unit (TPU). Under this agreement, Broadcom will supply networking and related components needed for rack servers in Google's data centers. By 2027, Broadcom aims to achieve AI revenue from chips alone of over $100 billion, dwarfing its current total revenue of $64 billion.
Despite the fears of investors who may have misinterpreted the news, Broadcom remains a strong player in the industry with an attractive price-to-earnings ratio of 31 times forward earnings.