Broadcom's AI chip business faces mounting competition ahead of earnings

Google adds MediaTek as TPU partner, signs separate Marvell deal

Broadcom is set to report quarterly results Wednesday with analysts projecting its artificial-intelligence chip business will generate $100 billion in revenue in its next fiscal year. The projection comes as the chipmaker faces mounting competitive pressure after Google, the customer whose orders launched Broadcom’s AI-chip run, added a second chip partner and signed a separate long-term deal with a Broadcom rival, The Wall Street Journal reported.

The Wall Street Journal reported that AI chips accounted for 44% of Broadcom’s revenue in the first fiscal quarter of 2026 — the first time the company disclosed that figure — and that the share could climb to 70% within a year under analyst forecasts, sharpening concentration questions for investors.

Broadcom’s AI-chip business has grown into its central revenue driver, with analysts cited by the Journal projecting $100 billion from the segment in the next fiscal year. That growth has come alongside a shift in the competitive landscape around Google, the customer whose orders launched Broadcom’s AI-chip run.

Google had been codeveloping customized AI chips, called tensor processing units, with Broadcom for years before the AI boom. When Microsoft began infusing its Bing search engine with AI, Google saw a threat to its core advertising business and ordered as many AI chips as it could — “Broadcom was off to the races,” the Journal wrote. Subsequent custom-chip deals followed with Meta Platforms and OpenAI.

The competitive picture has since changed. While Broadcom was once Google’s sole partner in designing its TPUs, Google has since brought Taiwan’s MediaTek into the work. Google also recently signed a long-term deal with Marvell Technology for networking and other custom chips; Marvell said the deal could bring in roughly $120 billion of revenue through its 2033 fiscal year. Although the Marvell arrangement does not compete directly with Broadcom’s TPU business, the Journal reported that Google is charting a course that lessens its reliance on its existing partner.

As the Journal noted, the disadvantages of Broadcom’s AI-chip strategy are coming into sharper focus as the financial capacity of the healthiest tech companies gets stretched. The chips Broadcom helps customers design are customized for specific computing workloads, an advantage over general-purpose chips from Nvidia. The design specificity becomes a drawback if a customer falters, since the resulting chips and underlying designs are harder to transfer elsewhere.

For investors, the shift has reshaped Broadcom’s appeal. Broadcom came into the AI boom, in the Journal’s words, as a “hodgepodge of chip and software businesses” assembled by Chief Executive Hock Tan. Those businesses were not fast-growing by AI-era standards but carried healthy profit margins. With AI-chip revenue projected to rise from 44% to 70% of the total, the diversification that once gave the stock broader appeal is receding.

Broadcom shares have risen 6% this year, against a 60% gain for the PHLX Semiconductor Index. The stock trades at about 20 times forward earnings, slightly above the index’s 19-times average and above Nvidia’s roughly 17-times multiple.

The Journal wrote that “Broadcom is riding high. Yet it still has much to prove.”