Most of the attention in the AI chip boom lands on Nvidia and its graphics processing units. But there's an arguably more interesting corner of the market where two companies are building the chips the biggest tech firms want to design for themselves. Broadcom (AVGO 0.31%) and Marvell Technology (MRVL 2.90%) are the two names that dominate it, and while they chase the same opportunity, they go about it very differently -- and the market prices them very differently, too.
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Before comparing the two, it helps to understand what they do. When a giant cloud company like Alphabet or Meta runs enormous AI workloads, it can either buy general-purpose chips off the shelf or design its own chip tuned precisely to its software. That second path, a custom chip, sometimes called an ASIC or an XPU, can be cheaper to run and more power-efficient at massive scale. The catch is that these companies don't build the chips alone; they lean on a partner with the deep engineering expertise to turn a design into working silicon. Broadcom and Marvell are those partners, and demand for their help has exploded as hyperscalers race to control their own chip destiny rather than depend entirely on Nvidia.
NASDAQ: NVDA
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What Broadcom is doing
Broadcom is the established heavyweight here, and its recent moves show why. It has assembled a remarkable roster of custom-chip customers that reportedly includes Google, Meta, OpenAI, Anthropic, and -- in a notable new disclosure this year -- Apple. In June, Broadcom and OpenAI even revealed their first jointly designed chip. Just as important, Broadcom doesn't just make the accelerators; it also dominates the networking gear that ties thousands of chips together inside a data center, having recently moved its latest switch chip into high-volume production.
What I find most reassuring about Broadcom's setup is its diversification. Beyond AI silicon, it runs a large and profitable infrastructure software business, which gives it a steadier foundation than a pure-play chip company. When one part of the market cools, the other can keep humming. Broadcom is essentially trying to be the one-stop shop for building the guts of an AI data center.
NASDAQ: AVGO
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What Marvell is doing
Marvell is the smaller, hungrier challenger, and its strategy is more focused. It designs custom chips for a growing list of hyperscalers, but its real signature is wrapping those chips in optical interconnect technology -- the high-speed "plumbing" that moves data between processors. That combination is clever, because a customer using Marvell's building blocks inside its chip is likely to buy Marvell's connectivity products too, which makes the relationship harder for rivals to break.
To bulk up in that fight, Marvell has been buying capability rather than waiting to build it, closing acquisitions of interconnect specialists earlier this year. It's a more aggressive, acquisition-fueled approach that reflects a company sprinting to close the gap with Broadcom. Marvell was also recently added to the S&P 500, a marker of how far it has come.
NASDAQ: MRVL
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The valuation showdown
Here's where the two genuinely diverge. Marvell trades at a much richer valuation than Broadcom, suggesting the market is pricing in faster growth for the smaller company. Broadcom, despite its dominance and steadier profile, actually carries the more modest multiple of the two. So the "showdown" boils down to a classic trade-off: With Marvell, you're paying a premium for a purer, faster-growing bet on the custom-chip and interconnect boom. With Broadcom, you're getting the diversified market leader at a more reasonable price, with software revenue cushioning the ride.
Neither is risk-free. Marvell's lofty valuation leaves little room for a stumble, and its growth leans heavily on a handful of enormous customers and on integrating its acquisitions well. Broadcom's sheer size makes rapid growth harder to sustain, and it too depends on a concentrated group of hyperscaler clients whose spending could shift.
If you're choosing between them, the question isn't which company is better, as both are strong, but which trade-off suits you. Marvell offers higher-octane growth at a higher price and higher risk. Broadcom offers dominance and diversification at a more grounded valuation.
