Top Erste Group analyst Hans Engel updated his views on chip stocks Broadcom (AVGO) and Marvell (MRVL), downgrading Broadcom to a Hold while initiating Marvell with a Buy rating. He sees better upside in Marvell, supported by strong growth trends, while Broadcom faces pressure from slower software growth and earnings headwinds.
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Broadcom Delivers Growth, but Headwinds Persist
Engel expects Broadcom’s momentum to continue in the near term. The company is guiding for about $22 billion in second-quarter revenue, which would mark a strong 47% year-over-year increase. AI semiconductor sales are also expected to reach $10.7 billion, showing continued strength in this key segment.
However, the analyst flagged a key concern. He expects Broadcom’s software business to grow at a slower pace over time, which could weigh on overall performance. In addition, goodwill amortization is likely to act as a drag on earnings growth.
Marvell Seen Offering Better Upside
In contrast, Engel is more positive on Marvell, pointing to strong growth trends and improving profitability. The company has doubled its net profit over the past five quarters, while return on equity has risen to around 19%. The analyst expects both revenue and profit growth to remain strong in the coming quarters.
He also highlighted Marvell’s position in high-performance analog and optical technologies, along with its partnership with Nvidia (NVDA). Nvidia is also taking a $2 billion stake in the company, which Engel views as a strong vote of confidence.
Overall, Engel believes Marvell offers better upside potential at current levels, making it his preferred pick over Broadcom.
Which Is the Better Chip Stock According to Analysts?
According to TipRanks’ Stock Comparison Tool, analysts have assigned a “Strong Buy” consensus rating on both AVGO and MRVL stocks, with Broadcom stock offering a higher upside potential over the next twelve months. AVGO stock also carries a higher dividend yield compared to MRVL.
