The "alternative" battle of Nvidia: Is Marvell more suitable than Broadcom?

As competition in the AI chip market intensifies, chip companies seem to be "on edge," and the market share of the dominant Nvidia is threatened by the "two major alternatives," Broadcom and Marvell.

Analysts believe that although Broadcom holds about 70% of the custom AI chip market, Marvell, with its advantageous position among cloud computing clients, greater growth potential, and more attractive valuation, may be better positioned to challenge Nvidia than Broadcom.

Nvidia's "alternatives" begin to gain momentum, Marvell's advantages emerge

In the past three months, due to Broadcom and Marvell actively assisting tech giants like Google and Amazon in developing custom AI chips, their revenues have soared, and both companies have begun to attract investor interest, with stock prices rising over 30%.

In contrast, the revenue growth of AI chip leader Nvidia has slowed, and its stock price appears lackluster. Investors seem to be starting to believe that at least Broadcom could eventually break Nvidia's control over the AI chip market. Raymond James analyst Srini Pajjuri stated:

"Broadcom is currently the leader in manufacturing custom AI chips, while Marvell is 'close behind'; they are the only two companies in the U.S. heavily engaged in this business."

As the "only two" in the U.S., the "competition" between Broadcom and Marvell has also begun.

In early December last year, Broadcom CEO Hock Tan heavily promoted the potential of the custom AI chip market, claiming that the company's three major clients, including Google, could spend $60 billion to $90 billion per year on custom chips within two years.

However, analysts believe that although Broadcom currently holds about 70% of the custom AI chip market, over time, its share may be taken by Marvell, and Broadcom's market share could drop to around 50%. Specifically, Marvell has several advantages:

1. Support from important clients: Marvell has already won the favor of important clients like Amazon, and possibly Microsoft as well. Broadcom has alienated clients like Amazon due to its tough negotiation strategies.

2. Favor from cloud service providers: Analysts believe that the main demand for custom AI chips will come from cloud service providers like Amazon, Microsoft, and Google, where Marvell has a competitive edge.

3. Greater growth potential: Due to its current smaller scale, Marvell has more room for growth from the expansion of the AI chip market. It is expected that by 2028, Marvell's annual revenue from AI chips could grow to over $20 billion, with overall revenue being four times its current level. Additionally, Marvell's valuation is more attractive.

Nvidia will still maintain its dominant position

Despite the rapid development of custom AI chips by Broadcom and Marvell, analysts believe that NVIDIA's dominance in the overall AI chip market is unlikely to be shaken in the short term.

Kevin Krewell, chief analyst at technology research firm Tirias, stated that NVIDIA's GPUs are more versatile and "user-friendly" compared to the AI chips developed by Broadcom and Marvell, supporting a wider range of workloads. Custom chips are still considered a "niche" business compared to NVIDIA's general-purpose chips.

In addition, NVIDIA's technological accumulation and ecosystem development in the AI chip field are far ahead of these competitors