Marvell Technology (MRVL) – Get Free Report shares jumped higher in pre-market trading following reports that suggest the group could replace Broadcom (AVGO) – Get Free Report as the key supplier of AI chips to tech giant Google (GOOGL) – Get Free Report within the next three years.
The Information reported that Google, which is ramping-up its AI investments in order to win back market share it lost earlier this year to Microsoft (MSFT) – Get Free Report, is looking to replace Broadcom with Marvell to develop and advanced chip known internally as ‘Granite Redux’.
The report also suggested Google would drop Broadcom, following a dispute over chip pricing, and design its own tensor processing units in-house.
Late last month, Marvell issued a muted near-term outlook that clouded solid second quarter earnings, but noted that AI demand is likely to continue to drive sequential revenue gains that are higher than anticipated,
Broadcom’s near-term outlook was similarly weak, tied in part to softer corporate cloud investment trends, but also said that AI chip sales are on track to represent around 15% of overall revenues this fiscal year, and 25% by the end of fiscal 2025, suggest a solid longer-term profit track for a company that enjoys a gross margin of more than 75%.
Marvell shares were marked 3.9% higher in pre-market trading to indicate an opening bell price of $55.01 each. Broadcom shares, meanwhile, slumped 4.9% to $790.00 each, a move that would still leave the stock with a near 50% gain for the year.
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