Custom AI Chips Set to Revolutionize Tech: Broadcom and Marvell Lead the Charge

In the evolving landscape of artificial intelligence (AI), companies are moving away from traditional graphic processing units (GPUs) to embrace more specialized hardware. While GPUs, originally designed for gaming graphics, have been pivotal in training AI models, custom AI chips—also known as application-specific integrated circuits (ASICs)—are rapidly gaining traction. These chips, built for specific tasks, outperform GPUs in terms of efficiency but lack the flexibility GPUs offer.
Let’s delve into two companies at the forefront of custom AI chip development: Broadcom and Marvell Technology.
Broadcom: Dominating the Custom AI Chip Space
Broadcom (NASDAQ: AVGO) has established itself as a leader in custom AI chips. Its first major customer in the AI space was Alphabet, which partnered with Broadcom to design its tensor-processing unit (TPU), named Trillium. These custom chips are tailored for Google Cloud’s TensorFlow—a key AI and machine learning software library. The unique design of the TPUs, featuring matrix multiply units (MXUs) and SparseCores, has helped Alphabet reduce costs and improve the efficiency of AI training and inference.
Over time, Broadcom expanded its customer base, which now includes tech giants like Meta Platforms, ByteDance, OpenAI, and Apple. In fiscal 2024, Broadcom saw its AI revenue soar past expectations, topping $12 billion, well above the anticipated $7.5 billion. The company is particularly optimistic about the future. Broadcom forecasts a potential $60 billion to $90 billion revenue opportunity by 2027 from just its initial AI customers, each of which could deploy up to 1 million AI chips by then.
Despite some business potentially going toward GPUs, Broadcom’s future in custom AI chips remains promising, especially as the company has positioned itself as a strong player in the AI chip market. At a forward price-to-earnings (P/E) ratio of 35.5 based on 2025 estimates, the stock offers a compelling value for investors keen on the growing custom chip market.
Marvell Technology: Accelerating Custom AI Growth
Marvell Technology (NASDAQ: MRVL) is another key player advancing custom AI chips, although it operates differently from Broadcom. While Broadcom designs entire chips for its clients, Marvell’s focus is on providing essential intellectual property, particularly around high-speed SerDes (Serializer-Deserializer). One of its prominent collaborations is with Amazon, helping the tech giant develop its Trainium chip used to train large language models (LLMs).
Marvell’s custom AI chip program has gained significant traction, evidenced by its recent five-year deal with Amazon’s AWS cloud unit, which includes custom AI products and data center switches. Additionally, Marvell projects its custom AI chips market to grow into a $40 billion opportunity, aiming for a 20% market share—equating to $8 billion.
The company has already achieved impressive growth, projecting over $1.5 billion in AI revenue for fiscal 2025. A major chunk of this revenue will come from Marvell’s growing custom silicon program. Moreover, Marvell’s strong presence in the data center market—with a 98% year-over-year surge in data center revenue—positions it well for future growth. Currently, data center revenue makes up 73% of the company’s total revenue, a sharp rise from 39% the previous year.
While Marvell’s stock trades at 42 times next year’s earnings estimates, reflecting a premium valuation, its strong momentum in both custom AI chips and data centers makes it a compelling growth stock for investors looking at the future of AI.
The Future of Custom AI Chips
As AI applications continue to expand, the demand for specialized, high-performance chips is set to rise. Both Broadcom and Marvell are well-positioned to capture significant market share in this rapidly evolving sector. Whether through Broadcom’s complete custom chip designs or Marvell’s intellectual property in key AI areas, these companies are driving innovation and efficiency in the AI hardware space, opening new opportunities for investors and technology enthusiasts alike.