Broadcom vs. Marvell: Which Custom AI Chip Stock Is the Better Buy?

Application-specific integrated circuits (ASICs) are custom chips designed to perform specific tasks, and demand for these chips has been growing at a terrific pace amid the artificial intelligence (AI) infrastructure boom.

As custom AI processors are designed exclusively to perform a specific task, they are extremely efficient at that task. This results in higher energy efficiency and improved performance over general-purpose chips, such as graphics cards. The lower cost of running AI workloads on custom chips is why major hyperscalers and AI companies have been designing in-house processors.

Marvell Technology (NASDAQ: MRVL) and Broadcom (NASDAQ: AVGO) are among the leading players in custom AI chips, which explains why they have been growing at an incredible pace. Let's take a closer look at their business and decide which of these semiconductor stocks is a better buy right now for investors looking to capitalize on the fast-growing custom AI space.

Image source: The Motley Fool.

Marvell and Broadcom dominate the custom AI chip market, but one of them is significantly bigger

Counterpoint Research estimates that Broadcom will control 60% of the custom AI chip market in 2027. Marvell is a challenger to Broadcom in this space, with a market share of 20% to 25%.

Broadcom's dominant share explains why it is growing at a significantly faster pace. Its revenue in the third quarter of fiscal 2026 (which ended on Aug. 2) increased 86% year over year to $29.6 billion. Broadcom noted that its impressive growth was driven primarily by a 221% year-over-year increase in AI semiconductor revenue to $16.7 billion.

The impressive top-line growth translated into a 96% year-over-year increase in the company's earnings per share to $3.32. The good news for Broadcom investors is that the company expects its AI chip revenue to increase 236% year over year in the current quarter to $21.7 billion.

The rapid growth in Broadcom's AI chip revenue can be attributed to its solid customer base, which includes OpenAI, Anthropic, Meta Platforms, and Alphabet's Google, among others. Importantly, Broadcom predicts that its AI chip momentum will continue well beyond fiscal 2026.

Specifically, the company anticipates an increase of 186% in AI chip revenue in fiscal 2026 to $58 billion, followed by an increase of almost 2x in fiscal 2027 to $115 billion. What's more, Broadcom predicts that its AI chip revenue could jump to $230 billion in fiscal 2028. Broadcom believes that this phenomenal growth trajectory could take its earnings per share to more than $30.00 in fiscal 2028. That would be a significant improvement over the company's estimated fiscal 2026 earnings per share of $11.64.

Marvell, meanwhile, reported a 37% year-over-year increase in revenue in the second quarter of fiscal 2027 (which ended on Aug. 1) to $2.74 billion. Its earnings-per-share growth was also healthy at 40%. Though Marvell's growth is respectable, Broadcom's numbers make it clear that its dominance in custom AI chips is giving it a bigger boost.

Also, Marvell's guidance suggests it won't match Broadcom's superior growth anytime soon. The company anticipates a 45% jump in revenue in fiscal 2027 to $12 billion, followed by a 50% increase in fiscal 2028. Marvell management notes that its custom AI business is on track to more than double in fiscal 2028 and will "accelerate significantly in fiscal 2029."

So, the custom AI chip market's growth is proving to be a tailwind for Marvell, but it is easy to see that Broadcom enjoys an upper hand owing to its dominance. Also, a closer look at the valuations of both companies will further tell us why investing in Broadcom stock could be the smarter move.

Broadcom's valuation makes it a no-brainer buy

Marvell stock has soared 163% in 2026, as of this writing. Broadcom, meanwhile, has been a laggard with gains of just 3%.

However, Broadcom's underperformance suggests that the market hasn't given it enough credit for its remarkable growth. That's the reason why it is significantly cheaper than Marvell.

Data by YCharts

The chart above also suggests that Broadcom's earnings per share could increase faster than Marvell's over the long run. So, investors looking to choose from these AI stocks have a simple decision to make. Broadcom's faster growth and cheaper valuation could supercharge the stock, while Marvell's relatively slower growth could weigh on its shares after a strong 2026 rally.

Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Broadcom, Marvell Technology, and Meta Platforms. The Motley Fool has a disclosure policy.