Broadcom Stabilizes as Google Turns Custom Chips Into a Contest

This article first appeared on GuruFocus.

Broadcom (NASDAQ:AVGO), the semiconductor and infrastructure-software company, edged approximately 0.2% higher to $359.58 Tuesday morning after last week’s Google-Marvell agreement triggered a sharp selloff. Google (NASDAQ:GOOG) can acquire almost 59 million Marvell (NASDAQ:MRVL) shares as purchasing milestones are satisfied, aligning the companies across custom accelerators, networking, storage and memory-interface products.

The competitive threat is credible, but Broadcom is not entering the fight empty-handed. Its fiscal second-quarter AI semiconductor revenue surged 143% to $10.8 billion. Broadcom also maintains a long-term Google relationship covering future custom processors and AI-rack components. Marvell’s win broadens Google’s options; it does not instantly unwind Broadcom’s installed engineering position.