Nvidia has been the leading name in the artificial intelligence (AI) chip market for more than three years now, exercising terrific control over this space thanks to the technological advantage its graphics processing units (GPUs) have over rivals.
Nvidia still controls an impressive 81% of the AI chip market after all these years. Importantly, the company seems poised to maintain its dominant position in this space with its upcoming Vera Rubin chips, which are expected to significantly reduce AI model training and inference costs. Not surprisingly, major hyperscalers are committing to deploying Nvidia's next-generation AI chips when they become available later this year.
However, Nvidia's position as the world's largest company by market cap could weigh on its stock price, along with concerns about the growing competition the company may face. As a result, it won't be surprising to see a smaller rival like Marvell Technology (MRVL 3.08%) outperforming Nvidia stock in 2026.
Let's see why that may be the case.
Image source: Nvidia.
Custom AI processor demand could supercharge Marvell stock this year
Marvell Technology designs application-specific integrated circuits (ASICs), custom processors tailored to specific tasks. These custom processors are gaining popularity among AI hyperscalers due to their cost efficiency and performance advantages over the graphics processing units (GPUs) that Nvidia designs.
As custom AI processors are designed to perform specific tasks as compared to the general purpose computing of GPUs, they consume less power and are faster. This is the reason why the share of ASICs in AI servers is expected to jump from 20.9% in 2025 to 27.8% this year, according to market research firm TrendForce. The share of GPUs, meanwhile, is anticipated to shrink from 75.9% last year to 69.7% in 2026.
Marvell allows investors to capitalize on the expanding market for custom AI processors. The company aims to quadruple its share of custom AI processors by 2028 from around 5% in 2023. What's more, it sees its addressable market expand from $21 billion to $94 billion over the same period, driven by incremental opportunities in custom AI chips.
NASDAQ: MRVL
Key Data Points
All this explains why Marvell's revenue in the recently concluded fiscal 2026 (which ended last month) is estimated to have jumped by almost 42% from the prior year to $8.18 billion, along with an impressive 80% increase in earnings per share to $2.83 per share. Another repeat performance could be in the cards this year, given the growing share of custom processors in the AI chip space and the heavy spending on AI data centers.
Even better, Marvell is well positioned to capitalize on the custom AI chip opportunity, as it has a wide customer base that includes the likes of Alphabet, Amazon, and Microsoft. What's more, Marvell points out that it is pursuing more than 10 customers in custom AI chips and sees the opportunity to corner more than 50 chip designs in the long run across its potential customer base.
That would be a nice jump over the current count of 18 chip designs that Marvell has already won across the four major hyperscalers in the U.S., as well as emerging hyperscalers. As such, don't be surprised to see Marvell's revenue and earnings growing at a greater pace than analysts' expectations in the new fiscal year.
Analysts anticipate a bigger jump in Marvell stock this year than for Nvidia
Marvell Technology's median 12-month price target of $119 suggests a potential upside of 50%. That's higher than the 30% estimated upside in Nvidia stock over the next 12 months as per the stock's median price target of $250.
The stock could indeed register bigger gains than Nvidia since it could easily outpace the 23% earnings jump analysts are forecasting for fiscal 2027. Marvell will release its fourth-quarter fiscal 2026 results on March 5, and it could pop higher on solid numbers and better-than-expected guidance. Another point worth noting is that Marvell is trading at 10 times sales, a big discount to Nvidia's sales multiple of 24.
So, the market could reward Marvell stock with a premium valuation owing to its stronger performance, and that's precisely the reason why this custom AI chip designer could outperform its more illustrious peer in 2026.
