Broadcom shares dropped 4.4 percent by late morning Wednesday after Marvell Technology disclosed a sweeping custom-silicon agreement with Alphabet, Broadcom's largest customer and longtime partner on Google's Tensor Processing Unit.
The warrant that spooked the market
Marvell's filing revealed a warrant granting Google the right to buy up to 58,970,907 shares at $206.58 each. The first 1.36 million shares vest in quarterly installments over the first year; the rest unlock in 240 equal tranches between Marvell's fiscal 2027 and 2033, one tranche for every $500 million of custom products Google purchases. The structure ties Marvell's dilution directly to Google's procurement volume, a mechanism that reads less like a partnership and more like a revenue-sharing arrangement disguised as equity.
Broadcom's existing moat
The reaction assumes a zero-sum swap, but the paper trail suggests otherwise. In April Broadcom signed a five-year deal to develop future TPU generations and supply the networking and rack-level components that surround them. Chief Executive Hock Tan has since told investors the company has line of sight to more than $100 billion of AI chip revenue alone by 2027, a figure that would dwarf the $64 billion in total revenue Broadcom recorded in 2025.
Valuation context
At 31 times forward earnings Broadcom trades at a discount to the scale of that forecast. The market's Wednesday move looks like a classic sell-first, ask-questions-later episode, the kind that happens when a headline mentions a major customer and a competitor in the same sentence, regardless of whether the contracts actually conflict.
What to watch
The warrant's vesting schedule stretches seven years. Google's actual custom-silicon spend with Marvell, and whether it displaces any Broadcom scope, will not be visible for quarters. Until then the $100 billion AI revenue target and the April five-year agreement remain the only hard commitments on the table.