Semiconductor stocks Broadcom(NASDAQ:AVGO) And Marvell technology(NASDAQ:MRVL) have posted stellar gains in 2024, with both companies’ shares more than doubling at the time of writing thanks to fast-growing demand for their application-specific integrated circuits (ASICs) and networking chips deployed in data centers to tackle artificial intelligence (AI)- workloads.
Broadcom shares are up 124% this year and Marvell shares are up 93% at the time of writing. But if you had to choose one of these two AI stocks for your portfolio now, after the gains they made in 2024, which should you buy? Let’s find out.
Demand for AI-specific ASICs is growing as cloud service providers look to develop chips in-house to reduce their dependence on expensive semiconductors, among other things. Nvidia. This is where Broadcom steps in; it reportedly produces custom chips for big names such as Alphabet‘s Google, TikTok parent company ByteDance and Metaplatforms.
This strong customer base has allowed Broadcom to make the most of the fast-growing custom AI processor market. The chipmaker generated $12.2 billion in revenue from sales of its custom AI chips and network processors in fiscal 2024 (which ended Nov. 3). That was a notable 220% increase from the $3.8 billion in revenue the company generated from AI chips in fiscal 2023.
The good part is that Broadcom predicts its AI-related market will grow to a range of $60 billion to $90 billion by fiscal year 2027. Management pointed out during the last earnings conference call that the company is “very well positioned to capture leading market share in this opportunity and expect it to drive a strong increase in our AI revenue base of $12.2 billion by 2024.” “
A key factor that will work in Broadcom’s favor is its strong share of the ASIC market. JPMorgan estimates that it has between 55% and 60% of the custom chip market. If that is indeed the case after the next three years and the company manages to capture even half of this space, annual AI revenues could range from $30 billion to $45 billion (based on estimated market size for custom AI chips by the company).
So Broadcom’s AI revenues have the potential to increase by a multiple of 2.5 to 4 over the next three years. This explains why analysts have increased their expectations for the current and next two financial years.
AVGO revenue estimates for the current fiscal year; data by YCharts.
The chart above points to a nice acceleration in Broadcom’s revenue, as it ended fiscal 2024 with organic revenue growth of 9% (excluding the VMware acquisition, which closed in November 2023).
The company ended fiscal 2024 with consolidated revenue of $51.6 billion. The chart above shows that revenue is expected to grow at healthy double digits over the next three years.
As such, there’s a good chance it could also remain a top AI stock, given its share of the lucrative custom AI chip market.
Marvell is considered the second largest player in the ASIC market, with an estimated share of 13% to 15%. However, the chipmaker is gaining ground and is reportedly producing custom AI chips for the likes of Alphabet. MicrosoftAnd Amazon.
Demand for Marvell’s custom AI processors appears to be robust, as the company’s data center revenues rose 98% in the third quarter of fiscal 2025 (ended November 2) from the same period last year to 1 .1 billion dollars. This excellent growth offset weak performance in the company’s other business segments, which explains why total revenue rose just 7% year-over-year to $1.52 billion.
However, the outlook for the current quarter indicates that things are improving rapidly. The company’s revenue guidance of $1.8 billion for the current quarter indicates a year-over-year increase of 26%. That would be a big improvement over the previous quarter. It expects a similar increase in earnings to $0.59 per share. By comparison, Marvell’s profits rose just 5% last quarter compared to the same period a year ago.
This rapid improvement in financial performance can be attributed to the faster-than-expected growth of the AI ​​business. The company originally expected $1.5 billion in AI revenue in the current fiscal year, but now believes it will significantly exceed its full-year target. This is due to a faster-than-expected increase in demand for custom AI chips.
More importantly, Marvell expects its AI revenues to reach $2.5 billion in the next fiscal year, but the possibility of exceeding this mark cannot be ruled out as Amazon and others have expanded their relationship with the chipmaker.
Management says it has “secured supply chain capacity to support our customers’ growth forecasts,” suggesting it may be able to achieve faster growth by meeting higher demand.
Ultimately, the growth of the company’s AI business is so strong that revenue is expected to rise 41% to $8.11 billion in the next fiscal year, after improving just 4% in the current year to $5.75 billion dollars. Consensus estimates predict that Marvell’s impressive growth will continue beyond the next fiscal year.
MRVL revenue estimates for the current fiscal year; data by YCharts.
The solid revenue growth explains why Marvell’s earnings are expected to grow at a stellar pace in the coming fiscal years, after jumping from just 3% in the current one to $1.56 per share.
MRVL EPS estimates for the current fiscal year; data by YCharts.
So even Marvell has the potential to remain a top AI stock, but is it a better buy than Broadcom?
We have seen that both Marvell and Broadcom will achieve impressive growth. However, the expectation is that the former will do it faster, as we saw earlier in the charts. That can be attributed to the company’s smaller size and potential market share gains in custom AI chips.
This is probably also why Marvell has a richer valuation than Broadcom.
AVGPO PE ratio (1 year ahead); data by YCharts. PE = price/profit.
So, investors looking for an AI stock that can deliver faster growth can consider Marvell, even if it is a bit expensive compared to Broadcom. But at the same time, Broadcom’s dominant position and large addressable market for AI chips means investors probably won’t go wrong with this name either if they’re looking for a slightly cheaper stock.
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. JPMorgan Chase is an advertising partner of Motley Fool Money. Suzanne Frey, a director at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, former director of market development and spokeswoman for Facebook and sister of Mark Zuckerberg, CEO of Meta Platforms, is a member of The Motley Fool’s board of directors. Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool holds positions in and recommends Alphabet, Amazon, JPMorgan Chase, Meta Platforms, Microsoft and Nvidia. The Motley Fool recommends Broadcom and Marvell Technology and recommends the following options: long calls in January 2026 for $395 at Microsoft and short calls in January 2026 for $405 at Microsoft. The Motley Fool has a disclosure policy.
Better Artificial Intelligence (AI) Stock: Broadcom vs. Marvell Technology was originally published by The Motley Fool
