Over the past month, stocks tied to artificial intelligence (AI) have faced a decline. While AI excitement fueled several stocks in 2024, investors now seem uneasy. Concerns over valuations, potential tariffs, trade restrictions with China, and a slowdown in AI spending have caused some caution in the market.
Two companies that gained attention in 2024 were Broadcom (AVGO) and Marvell (MRVL). Despite similarities in their portfolios, the two companies experienced starkly different performances last week. While Broadcom saw its stock price soar, Marvell’s share price plummeted. This contrast highlights shifting dynamics in the AI race.
Broadcom and Marvell both focus heavily on infrastructure chips for networking and communications. They also share a significant interest in custom ASICs (application-specific integrated circuits) for AI accelerators used by cloud hyperscalers. These custom chips, known as XPUs, have gained massive growth as AI expansion continues. In fact, custom ASICs have been central to both companies’ strategies.
Marvell’s CEO, Matt Murphy, explained that two years ago, the company projected $200 million in ASIC revenue for 2023 and $400 million for 2024. However, Marvell far exceeded expectations, generating over $1.5 billion in 2024 and projecting more than $2.5 billion in 2025. Despite this success, the company faced challenges when discussing its ASIC business during its recent conference call.
The key reason behind Marvell’s struggle lies in investor concerns over the future of its custom ASIC business. Investors were not reassured during Marvell’s earnings call, causing them to question the company’s growth trajectory. Meanwhile, Broadcom’s performance stood in stark contrast, as its AI-related business remains strong and investors appear confident in its future prospects.
To summarize, while both Broadcom and Marvell have a strong presence in AI-related infrastructure, their stock performances diverged significantly. Marvell’s struggles indicate growing skepticism around certain AI investments, while Broadcom continues to thrive in this rapidly growing sector.
For more business news updates, visit Dc brief.
