Broadcom (NASDAQ:AVGO | AVGO Price Prediction) shares are down 5% to $359.66 in early Wednesday trading after Marvell Technology (NASDAQ:MRVL) landed a deal to help develop custom AI chips for Alphabet‘s (NASDAQ:GOOGL) Google. The news directly pressures Broadcom’s status as Google’s incumbent custom silicon partner.
The move caps a rough stretch for Broadcom stock, which closed Tuesday at $380. Even after a blockbuster year for AI infrastructure names, Broadcom shares have gained 10% year to date through Tuesday’s close, a striking lag behind chip peers.
That divergence, and not the intraday drop alone, is the sharpest fact in Wednesday’s action. Broadcom sits at the center of the AI infrastructure buildout, yet its stock has not participated in the peer rally.
Marvell Lands a Google Chip Win
Reuters reported Wednesday that Marvell issued Google a warrant to buy a stake worth about $12.18 billion, tied to a deal to help develop custom chips. Marvell said it would develop AI inference accelerators, storage, networking and memory interface controllers, and near-memory computing technologies for Google.
Marvell stock is trading at $240.26, and Reuters reported shares jumped more than 11% in early Wednesday trading. Alphabet stock is down 0.7% to $341.96.
The pressure on Broadcom traces back to April, when Broadcom signed a long-term agreement with Google to develop and supply future generations of custom AI chips and other components for Google’s next-generation AI racks through 2031. A Marvell foothold at the same customer threatens the exclusivity of that franchise, which is exactly why AVGO stock is under pressure. Demand for custom chips such as Google’s tensor processing units has surged as businesses seek alternatives to expensive general-purpose graphics processors.
Peers Widen the Year-to-Date Gap
Marvell Technology stock has run 155% year to date through Tuesday’s close, a move driven by rising confidence in its custom silicon roadmap. Advanced Micro Devices (NASDAQ:AMD) stock is trading at $480.73, up 126% year to date through Tuesday’s close.
NVIDIA (NASDAQ:NVDA) stock is at $221.67, up 18% year to date through Tuesday’s close. Broadcom’s 10% year-to-date gain trails each of those AI chip names by a wide margin.
That gap is the core tension in Wednesday’s story. Broadcom’s AI semiconductor revenue reached $10.8 billion in Q2 FY2026, up 143% year over year, yet the stock has not tracked the operational momentum.
iShares Semiconductor ETF Also in the Mix
The iShares Semiconductor ETF (NASDAQ:SOXX) is down 0.7% to $527.59. The fund holds Broadcom among a broad basket of chip names and is up 77% year to date through Tuesday’s close.
Broadcom trailing the sector fund that owns it is itself the point. The ETF’s concentration in a handful of AI-exposed names means the fund carries real single-stock risk, so shareholders should size positions with that concentration in mind.
VMware and Financing Concerns Add to the Overhang
Two other worries are weighing on Broadcom sentiment. Stocktwits community discussion has tied selling pressure to concerns about Broadcom’s off-balance-sheet financing vehicles and reported VMware security concerns, with traders split on whether the pullback is an overreaction to market noise or a structural re-rating.
Broader scrutiny is building, as well. The Wall Street Journal reported Monday, August 17, that nine top tech companies carry roughly $3 trillion of off-balance-sheet commitments mostly related to AI, obligations growing faster than traditional capital expenditures. That reporting has sharpened focus on how the sector is financing its buildout.
Traders can watch for signs that Broadcom’s Google franchise remains substantial through 2031 despite the Marvell win. Shareholders may want to keep an eye on whether the stock reclaims the $380 level that gave way this week. The next anticipated catalyst is Marvell’s earnings call, which could quantify the Google deal’s economics and set the tone for how quickly the custom silicon pie is being redistributed.
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