Broadcom steadies itself after AI-chip jitters, as investors compare AVGO with smaller rival Marvell

Chip stocks tied to custom artificial intelligence hardware sold off last week, forcing investors to reassess expectations for companies that design the accelerators and networking gear inside large data centers. In that pullback, Broadcom (AVGO) fell alongside the broader group after its outlook for AI-related revenue came in below some Wall Street hopes, even as its latest quarter showed strong momentum.

Broadcom’s fiscal second quarter results, ended May 3, 2026, underscored how quickly its AI ramp is progressing. The company reported $22.187 billion in revenue, up 48% year over year, and said AI semiconductor revenue rose to $10.8 billion, up 143% from the prior year. Broadcom also reported free cash flow of $10.262 billion, about 46% of revenue, highlighting the cash-generating character of the business at scale.

Management also pointed to continued acceleration in the quarter ahead. In its earnings release, Broadcom forecast third-quarter semiconductor revenue from AI of $16.0 billion, which it characterized as more than 200% growth year over year. Separately, Reuters reported that Broadcom expected AI chip revenue of $16 billion in the current third quarter, slightly below consensus estimates at the time, and that it left a long-range outlook unchanged for $100 billion in AI-chip sales. The same Reuters report said Broadcom expects to ship more than 10 gigawatts’ worth of AI chips in 2027.

The stock drop mattered because it landed in an environment where investors have been trading “AI supply chain” stories at very high expectations. The most immediate market catalyst was that Broadcom’s second-quarter revenue missed Wall Street estimates in the Reuters account, and its AI-chip forecast was viewed as not quite keeping pace with the most optimistic projections, contributing to a sharp share decline after the results.

Marvell (MRVL), the other prominent name in custom AI silicon and data-center connectivity, has benefited from a similar theme but with different scale and risk. In its fiscal first quarter of 2027, ended May 2, 2026, Marvell posted record revenue of $2.418 billion, up 28% year over year, and said its data center business made up more than three-quarters of total revenue. Marvell guided second-quarter revenue to $2.7 billion at the midpoint, indicating 35% year-over-year growth.

Marvell also used the quarter to lift its longer runway. In its release, the company said it was seeing exceptional AI-related bookings and raised its revenue outlook for both fiscal 2027 and fiscal 2028 versus the guidance it provided last quarter. Marvell’s management pointed to demand across connectivity and optical networking products, as well as “custom XPU” and related solutions, which are designed to offload specific workloads from general-purpose processors in AI clusters.

Even with these positive updates, the comparison between Broadcom and Marvell comes down to how much investors are willing to pay for execution. Broadcom’s larger base, higher reported free cash flow, and the clear step-up in AI semiconductor growth make it look more resilient in the near term, while Marvell’s smaller revenue base and earlier-stage ramp can make its results more sensitive to any single customer program or timing shift.

Still, important details remain partially obscured by what companies typically disclose in these quarters. Broadcom and Marvell do not generally provide a fully itemized view of customer-specific contract terms, product mix by AI workload category, or the share of revenue tied to particular “wedge” programs, beyond high-level guidance figures. As a result, investors may be left inferring how much of current strength reflects durability versus near-term demand timing, especially after a sell-off driven by expectations rather than an abrupt collapse in reported growth.

What to watch next is whether management can translate guidance into sustained follow-through when the market is no longer focused only on growth rates. For Broadcom, the key question is whether AI semiconductor revenue can keep accelerating while maintaining free cash flow strength. For Marvell, investors will want to see whether the raised outlook holds up through subsequent quarters and whether its AI connectivity ramp translates into broadly stable results rather than a quarter-to-quarter swing.