- Broadcom shares dropped about 6%, trading 27.5% below their 52-week high of $495
- Marvell Technology expanded its custom-chip deal with Google, boosting Marvell shares 11%
- Broadcom remains Google's main AI chip partner with a contract through 2031 despite competition
Broadcom shares fell about 6% on Wednesday, leaving the stock roughly 27.5% below its 52-week record high of $495, despite strong growth in its artificial intelligence business. At 10:42 am GMT-4 on August 19, Broadcom (NASDAQ: AVGO) was trading at $359.66, down 5.31% or $20.16.
The latest decline came after rival Marvell Technology announced a deeper custom-chip relationship with Google, raising concerns among investors about Broadcom's future share of spending from one of its key AI customers. Marvell shares jumped about 11% following the announcement.
The deal covers several custom silicon programmes within Google's Tensor Processing Unit ecosystem. Google has received warrants to purchase up to 58.97 million Marvell shares at $206.58 each, representing potential purchases of about $12.2 billion if fully exercised. Most of the warrants vest when Google meets agreed purchasing targets through fiscal 2033.
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Broadcom has long been Google's primary partner for custom AI chips. The two companies still have a long-term agreement covering future generations of Google processors and networking components through 2031. However, Marvell's expanded role has raised questions over how much of Google's future AI spending Broadcom can retain as competition in custom silicon increases.
The pressure on Broadcom shares comes after several other concerns. The company disclosed a critical VMware vCenter vulnerability, CVE-2026-59310, on July 29 and released a fix. Researchers later identified compromised systems associated with 361 IP addresses across 47 countries.
Broadcom is also investing heavily in AI infrastructure. The company is working with Apollo and Blackstone on an AI infrastructure financing platform that began with a $35 billion transaction supporting Anthropic's computing-capacity expansion.
Bank of America estimates the financing vehicle could eventually reach $370 billion in senior debt by mid-2029 if capacity expands to 20 gigawatts.
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Yet Broadcom's underlying AI business remains strong. The company reported $10.8 billion in AI semiconductor revenue in fiscal second quarter, up 143% from a year earlier. Management expects AI semiconductor revenue of $16 billion in the third quarter and is targeting about $56 billion for fiscal 2026 and more than $100 billion in fiscal 2027.
Broadcom's shares have also been affected by broader market pressures. Rising US Treasury yields have weighed on high-growth technology stocks, while Bank of America downgraded Broadcom's issuer and bond ratings on Aug. 11, citing concerns around AI infrastructure financing and debt.
Investors will get the next major test on Sept. 2, when Broadcom reports its fiscal third-quarter results. The key question will be whether accelerating AI demand can offset concerns over competition, financing and customer concentration.
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