Wall Street’s AI trade may be expanding beyond graphics processors, with investor Gary Black arguing that custom chipmakers Broadcom, Inc. (NASDAQ:AVGO) and Marvell Technology (NASDAQ:MRVL) are emerging as some of the biggest beneficiaries of rising demand for specialized AI infrastructure.
Gary Black Says Wall Street Is Rewarding Custom AI Chip Leaders
On Tuesday, Black said Broadcom and Marvell “seem to be the big winners in Wall Street’s new appreciation for custom AI chips,” pointing to growing investor enthusiasm around application-specific integrated circuits, or ASICs, used to power large-scale AI workloads.
The comments came as Marvell shares surged after Nvidia Corp (NASDAQ:NVDA) CEO Jensen Huang called it “the next trillion-dollar company” during a joint appearance with Marvell CEO Matt Murphy at Computex in Taiwan.
Broadcom shares climbed 4.7% Tuesday and added 2.79% in after-hours trading ahead of earnings, while Marvell rallied 32.52% during the regular hours and increased 9.64% in after-hours trading, according to Benzinga Pro.
Why AI Infrastructure Is Moving Beyond GPUs
Huang used the appearance to note that AI bottlenecks are increasingly shifting from compute power to connectivity.
“When you take a computing challenge, and you break it down into numerous components, distributing it throughout the entire data center, connectivity becomes crucial,” Huang said. “This is why Matt is performing so well, and why Marvell is so vital.”
Marvell’s business is heavily exposed to data centers, which account for roughly 76% of revenue, with investors increasingly focused on its optical networking, silicon photonics and custom chip operations.
Meanwhile, Broadcom remains the dominant player in ASICs, with Black citing an estimated 70% market share and major customers including Alphabet Inc.’s (NASDAQ:GOOG) (NASDAQ:GOOGL) Google, Meta Platforms, Inc. (NASDAQ:META), Microsoft Corp (NASDAQ:MSFT) and OpenAI.
Analysts project that on Wednesday, Broadcom will post second-quarter revenue of $22.1 billion, up from $15 billion reported in the same quarter a year earlier.
Meanwhile, Marvell reported quarterly earnings of 80 cents per share, surpassing analysts’ estimates of 79 cents, while revenue rose to $2.42 billion from $1.9 billion a year earlier, exceeding consensus expectations of $2.4 billion.
Benzinga Edge Stock Rankings place AVGO in the 96th percentile for Quality, highlighting strong performance across short, medium and long-term periods.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
Photo: PJ McDonnell / Shutterstock
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