Marvell Technology, Inc. (NASDAQ: MRVL) shares are soaring in early trading hours amid reports that suggest the company could take over as the primary supplier of AI chips for tech giant Google within the next three years.
According to a report by The Information, Google, in a bid to regain market share lost to Microsoft Corporation (NASDAQ: MSFT) earlier this year, is looking to replace Broadcom Inc. (NASDAQ: AVGO) with Marvell Technology, Inc. (NASDAQ: MRVL) to develop an advanced chip internally referred to as ‘Granite Redux.’
The report also indicates that Google plans to part ways with Broadcom due to a dispute over chip pricing and intends to design its own tensor processing units in-house.
While both Marvell and Broadcom recently issued subdued near-term outlooks, citing various market factors, they continue to emphasize the pivotal role of AI in their future growth.
Marvell’s outlook suggests that AI demand will fuel sequential revenue gains beyond initial expectations. Meanwhile, Broadcom expects AI chip sales to represent approximately 15% of its overall revenues for the current fiscal year, with projections of that figure rising to 25% by the end of fiscal 2025. This suggests a promising long-term profit track for the company, which currently enjoys a gross margin of over 75%.
As of the latest update, Marvell Technology stock is trading at $53.28, marking a 0.60% increase over the last trading session. On the other hand, Broadcom shares have witnessed a 2.49% slump, currently trading at $809.91 per share. Despite this downturn, Broadcom still boasts a nearly 15% year-to-date gain.