Broadcom is firing on all cylinders, and Wall Street can’t get enough of the stock
Broadcom shares hit an all-time high during Monday’s trading session after the emergence of another encouraging sign that the company’s custom chips are all the rage on the AI scene. The newest development comes from the tech website, The Information, which said Microsoft could be looking to move its custom chip business from Marvell Technology to Broadcom. The report is the latest in a string of recent good news for Broadcom, which delivers quarterly earnings after Thursday’s close. Shares of Marvell were understandably falling more than 7%. Also weighing on Marvell stock was a note from Benchmark, in which the analysts call out with a “high degree of conviction” that Amazon may also be looking to move the development of future generations of its Trainium chips away from Marvell to AIchip, a Taiwanese designer. Taken together, Broadcom shareholders should feel good about the company’s standing in the custom AI market, as specialized silicon emerges as a competitor to Nvidia’s all-purpose AI chips, which have been the gold standard in running artificial intelligence workloads. At the same time, the weakening position of Marvell amplifies Broadcom as the go-to company for custom chips. The Information report, as it relates to Microsoft, comes after the success of Google’s tensor processing units, which were co-developed by Broadcom. The TPUs have been praised in recent weeks following the release of Gemini 3, the latest large language model from Alphabet ‘s Google. Gemini 3, which has leapt to the top of the app leaderboards, was trained and runs entirely on Google’s custom TPUs. A couple of weeks ago, The Information reported that Meta Platforms was thinking about using Google’s TPUs for its data centers in 2027. While it’s great to watch Broadcom’s share price climb, we don’t love it when a stock runs into an earnings release, as it indicates high expectations. We do understand the move, though, because all this news has made it clear that Broadcom’s custom silicon business is primed for further gains. We don’t expect to hear much about these latest two developments on the post-earnings call. We do, however, suspect that talk about custom chip demand will center around the interest Broadcom has been seeing following the launch of Gemini 3. Outside of custom chips, there will be high interest in Broadcom’s networking business, which has seen incredible growth over the past year, given the increased need for high-bandwidth networking solutions resulting from the explosion of AI adoption — especially with the introduction of reasoning models and agentic solutions. On the legacy front, we expect to see some gradual improvement, thanks in part to seasonality as the company’s wireless revenues are tightly linked with the iPhone sales cycle, given that Apple is the company’s primary wireless customer. As for software, we continue to expect strong growth and margin performance driven by VMware, and we will be interested to hear about any additional synergy and cross-selling opportunities the team has been working on. (Jim Cramer’s Charitable Trust is long AVGO, MSFT, AMZN, META. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
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