Marvell vs. Broadcom: The Rising Challenger in the Custom AI Chip Arena

In the evolving landscape of AI chip technology, the question of whether Marvell is better suited than Broadcom to rival Nvidia has gained traction. Currently, Broadcom holds approximately 70% of the custom AI chip market share. Yet, analysts suggest that Marvell's strong position with cloud customers, significant growth potential, and appealing valuation might give it an edge, potentially challenging Nvidia's dominance in the future.

Over the past three months, both Broadcom and Marvell have significantly boosted their revenue by assisting tech giants like Google and Amazon in developing custom AI chips, resulting in each company's stock surging by over 30%. Despite Broadcom's current lead, Marvell's client base includes major supporters such as Amazon, distinct from Broadcom, which has strained relations with key customers due to its aggressive negotiation tactics.

The demand for custom AI chips is mainly driven by cloud service providers, notably Amazon, Microsoft, and Google, sectors where Marvell's strengths are pronounced. Although major player Nvidia faces a slow down in revenue growth, analysts believe Marvell's smaller scale allows ample room for expansion, forecasting its AI chip revenue could rise to over $20 billion annually by 2028.

While Marvell and Broadcom are propelling advancements in custom AI chip sectors, Nvidia's overarching lead in the broader AI chip market remains unchallenged for the time being. Nvidia's GPUs are celebrated for their versatility and user-friendliness, supporting a wide range of workloads compared to the more niche application of custom chips.