Arm’s Ready-Made Blueprints: The Blueprint Attack on Marvell’s Challenger Crown

Arm Holdings (NASDAQ:ARM | ARM Price Prediction) and Marvell Technology (NASDAQ:MRVL) both reported this summer, and their AI data center businesses now compete for the same customers. Arm moved beyond licensing into finished silicon with its AGI CPU. Marvell, the main custom-silicon challenger to Broadcom (NASDAQ:AVGO), raised its outlook again. Arm’s ready-made blueprints could reduce the custom design work Marvell sells.

Royalties Hum at Arm as Custom Chips Ramp at Marvell

Arm’s fiscal first-quarter revenue reached $1.29 billion, up 22%. The pace is solid even as smartphone volumes reduce. Data center royalties “more than doubled year over year once again.” AGI CPU demand “now exceeds $2 billion,” but the supply Arm has locked in only covers the initial $1 billion opportunity. Orders exceed available wafers and substrates, which limits near-term sales.

Marvell posted record revenue of $2.739 billion, up 37%. Data center sales made up 79% of total revenue, so the business now depends heavily on hyperscaler spending. CEO Matt Murphy said “AI-related bookings remain exceptionally robust.” An expanded deal with Google, part of Alphabet (NASDAQ:GOOGL), covers chips that attach to Google’s TPUs, such as network cards, storage controllers and memory controllers. It also includes a warrant that lets Google buy up to 7% of Marvell’s shares.

Ready-Made Blueprints Strike at Marvell’s Core Pitch

Marvell earned its challenger role against Broadcom by designing custom chips for cloud giants. Arm now offers those same customers a shortcut: a pre-validated Compute Subsystem (CSS) or a finished AGI CPU. Chief executive Rene Haas said customers “can deploy ARM through IP, compute subsystems or silicon, depending on what best fits your business.” Each hyperscaler that uses an off-the-shelf Arm design instead of ordering a custom CPU leaves one less project for a design partner like Marvell.

Arm also appears willing to accept thinner margins to win those chip slots. First-generation AGI CPU gross margin should land in the “high 30% range, maybe low 40s,” well below Marvell’s 58.9% non-GAAP gross margin. Marvell’s defense is in the chips that sit around the processor. Murphy said earlier forecasts for these XPU-attached products had been “under-called,” and scale-out switching should more than double in fiscal 2027.

AGI CPU Margins Will Decide Who Owns the Socket

I will be watching Arm’s fiscal third-quarter report, where management promised more detail on AGI CPU revenue and margin. You should keep an eye on whether Marvell’s custom business more than doubles in fiscal 2028 as guided. Both stocks have pulled back. Arm fell 36.94% over the past month, and Marvell lost 14.8%.

Why Marvell Holds the Near-Term Edge Until Arm’s Silicon Proves Out

Marvell offers more near-term visibility right now. Its bookings are visible, its non-GAAP operating margin expanded to 36.6% from 34.8%, and its optics business sits where Arm has little presence. Arm is valued at about 248 times earnings. That price assumes the chip business succeeds, which is still unproven. Arm also faces a licensing lawsuit headed to trial in Q4 2026. I would change my view if AGI CPU margins reach the 50% target early and more hyperscalers trade custom CPUs for Arm’s blueprints.

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