As competition in the AI chip market becomes more intense, chip companies all seem to be “straining a string”, and the market share of the dominant Nvidia has also been threatened by the “two major swaps” of Broadcom and Marvell.

Analysts believe that although Broadcom accounts for about 70% of the customized AI chip market, Marvell is probably superior and has more power than Broadcom to challenge Nvidia with its dominant position among cloud computing customers, greater growth potential, and more attractive valuation.

Nvidia's “replacement” begins to gain strength, and Marvell's advantages are revealed

In the past three months, as Broadcom and Marvell actively helped tech giants such as Google and Amazon develop customized AI chips, their revenue soared, and both companies began to be favored by investors, and their stock prices both surged by more than 30%.

In contrast, the revenue growth of Nvidia, which dominates AI chips, is slowing down, and its stock price also appears bleak. Investors seem to be beginning to believe that at least Broadcom can finally break Nvidia's control over the AI chip market. Raymond James analyst Srini Pajjuri said:

“Broadcom is currently a leader in manufacturing custom AI chips, and Marvell “follows”; they are the only two companies in the US that are heavily involved in this business.”

As the “only one” in the US, the “contest” between Broadcom and Marvell has also begun.

At the beginning of December last year, Broadcom CEO Hock Tan touted the potential of the custom AI chip market, claiming that the company's three major customers, including Google, could spend 60 billion-90 billions/year on custom chips within two years.

However, analysts believe that although Broadcom currently accounts for about 70% of the customized AI chip market, its share may be taken away by Marvell over time, and Broadcom's market share may drop to around 50%. Specifically, Marvell has several major advantages:

1. Support from key customers: Marvell has won the favor of important customers such as Amazon, and probably Microsoft. Broadcom, on the other hand, has alienated customers such as Amazon due to tough negotiation strategies.

2. The preference of cloud service providers: Analysts believe that the main demand for customized AI chips will come from cloud service providers such as Amazon, Microsoft, and Google, and Marvell has an advantage in this field.

3. Greater potential for growth: Due to its current smaller scale, Marvell has gained more room for growth from the AI chip market expansion. It is estimated that by 2028, Marvell's annual revenue for AI chips may grow to more than 20 billion US dollars, and the overall revenue will be 4 times the current level. Also, Marvell's valuation is even more attractive.

Nvidia will remain dominant

Although Broadcom and Marvell are developing rapidly in the field of customized AI chips, analysts believe that Nvidia's dominant position in the overall AI chip market will be difficult to shake in the short term.

Kevin Krewell, chief analyst at technology research firm Tirias, said that compared to AI chips developed by Broadcom and Marvell, Nvidia GPUs are more versatile, more “user-friendly,” and can support a wider range of workloads. Compared to Nvidia's general-purpose chips, custom chips are still just a “niche” business.

Furthermore, Nvidia's technology accumulation and ecosystem construction in the field of AI chips are far ahead of these competitors.