Broadcom vs. Marvell: One AI Stock Offers More Bang for the Buck, Says Top Investor

Broadcom (NASDAQ:AVGO) and Marvell (NASDAQ:MRVL) are two prominent chipmakers that have been delivering strong results as AI spending continues to reshape the semiconductor industry.

Broadcom’s AI semiconductor revenue is growing at an extraordinary rate, while Marvell is seeing rapid expansion in its data-center business as demand rises for custom silicon, connectivity and memory infrastructure. Both companies are also deepening their relationships with major hyperscalers, giving them exposure to some of the biggest AI infrastructure projects.

Yet there remains a significant gap in scale. Broadcom is a semiconductor giant, and while Marvell is no minnow, it is smaller and vying to capture a bigger piece of the AI pie.

Does that mean Marvell offers a better opportunity for investors given it has more room to grow? Not necessarily, says an investor using the pseudonym Bay Area Ideas (BAI), who ranks among the top 4% of investors on TipRanks.

Looking at Broadcom, BAI notes that its latest quarter was difficult to ignore. Fiscal Q3 revenue climbed 86% year over year to $29.59 billion, accelerating dramatically from 48% growth in Q2 and marking the fifth consecutive quarter of accelerating growth. AI semiconductor revenue was even stronger, soaring 221% to $16.7 billion. Management expects another acceleration in Q4, with AI semiconductor revenue forecast to rise 236%.

The outlook goes well beyond the next quarter. Broadcom now expects $58 billion in AI revenue for FY2026, followed by $115 billion in FY2027 and $230 billion in FY2028. In other words, management is projecting that AI revenue could quadruple over two years. BAI sees this as evidence that the current AI infrastructure boom is not simply a short-term surge.

The company’s profitability has also remained solid despite the changing revenue mix. Gross margin fell from 78% a year earlier to 75% as semiconductors made up a larger share of sales, but operating margin increased to 68%. Adjusted EPS rose 96% year over year, suggesting that Broadcom is still converting its rapid revenue growth into substantial earnings growth.

BAI also sees another piece of the story in VMware. Broadcom has been adding products focused on private AI clouds, security and managing AI agents, giving its software operation a potential role in the next phase of enterprise AI adoption.

That’s not to say there aren’t risks involved here. Tariffs could affect Broadcom’s supply chain, while its decision to lend Anthropic up to $42 billion has raised questions about circular financing within the AI ecosystem. If AI infrastructure spending were to slow materially, arrangements like this could create additional financial risk.

Even so, BAI points to Broadcom’s valuation as an important counterweight. Its forward P/E has fallen to around 30, despite the acceleration in its business. The investor also notes that its forward PEG ratio is substantially below the IT sector median, meaning the valuation has not risen in line with the company’s growth expectations.

Put all that together and BAI rates AVGO stock a Buy. (To watch Bay Area Idea’s track record, click here)

Marvell’s latest results were also strong, although the numbers tell a somewhat different story. Fiscal Q2 revenue increased 37% year over year to $2.74 billion, while data-center revenue grew 46%. That marked the second consecutive quarter of accelerating growth and confirmed that demand for AI-related infrastructure is translating into higher sales.

Marvell has several avenues for further expansion. Its CXL memory products target the growing requirements of AI systems, while its optical technology addresses the need for greater bandwidth inside data centers. The company is also deepening its relationships with hyperscalers, including Google, and could benefit from custom-chip programs involving other major cloud companies.

Q3 guidance points to another sharp acceleration, with revenue expected to reach approximately $3.15 billion, representing 52% year-over-year growth. The complication is profitability. Gross-margin pressure is expected to persist as the faster-growing custom business carries lower margins, creating a headwind as its contribution to revenue increases, while projected adjusted EPS growth is below the anticipated rate of revenue growth.

Nevertheless, BAI sees Marvell’s investment in India as a longer-term opportunity, particularly as the country’s semiconductor and AI ecosystem develops. However, the investor’s main concern remains the valuation. Marvell’s forward P/E is around 63, far above both its historical average and the broader IT sector.

So, while Marvell has an impressive growth pipeline and strong hyperscaler exposure, its valuation leaves less room for execution issues or further margin weakness.

To this end, BAI rates MRVL stock a Hold (i.e., Neutral).

The word on the Street is that both these stocks are Strong Buys. AVGO is expected to appreciate by 51% over the next year, given its average price target lands at $519.21. Based on an average target of $268.08, MRVL should notch returns of 12%. (See AVGO stock forecast or MRVL stock forecast)