Why Broadcom Stock Is Down Today and What Wall Street Predicts Next – August 19

Broadcom (NASDAQ:AVGO) stock is falling about 5% on Wednesday after rival Marvell Technology announced a much deeper custom-chip relationship with Google, raising concerns over Broadcom's future share of spending from one of its most important AI customers.

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The Marvell agreement goes well beyond a limited partnership, covering several custom silicon programs within Google's Tensor Processing Unit ecosystem. Google received warrants to purchase as many as 58.97 million Marvell shares at $206.58 apiece, representing up to about $12.2 billion in purchases if fully exercised. Most warrants vest only when Google meets agreed purchasing targets through fiscal 2033, giving Marvell a strong incentive to deepen the relationship over time.

That development matters for Broadcom, which has long served as Google's primary partner for custom AI chips. The chipmaker still has a long-term agreement covering future generations of Google processors and networking components through 2031, meaning Wednesday's announcement does not suggest an end to that relationship. Still, Marvell's larger role gives investors another reason to consider how much future Google spending Broadcom can retain as competition grows.

Wednesday's drop follows other developments that have weighed on AVGO recently, including concerns surrounding a critical VMware vCenter vulnerability known as CVE-2026-59310. Broadcom disclosed the security flaw on July 29 and released a fix, although researchers subsequently found compromised systems associated with 361 IP addresses spanning 47 countries.

Investors have another issue to consider as Broadcom pours money into expanding its AI operations. The company is working with Apollo and Blackstone on an AI infrastructure financing platform that launched with a $35 billion transaction supporting Anthropic's computing-capacity expansion. Bank of America estimates the related financing vehicle could eventually reach $370 billion in senior debt by mid-2029 if capacity expands to 20 gigawatts.

Yet, Broadcom's underlying AI operations continue growing at a pace that gives bulls considerable reason to remain optimistic. The company generated $10.8 billion in AI semiconductor revenue during fiscal Q2, representing growth of 143% from the prior-year period, while management expects $16 billion during Q3. Broadcom is targeting about $56 billion in AI semiconductor revenue for fiscal 2026 and more than $100 billion during fiscal 2027.

Broadcom's next important test arrives with its fiscal third-quarter earnings report scheduled for September 2. Investors will be watching whether soaring AI-chip demand can keep supporting growth.

Wall Street remains strongly bullish despite the growing competition within custom silicon. AVGO earns a Strong Buy consensus rating thanks to 23 Buy recommendations that easily beat three Holds. The average 12-month price target stands at $515.61, implying about 43% upside from current levels. (See AVGO stock forecast)