Microsoft (MSFT) is reportedly in talks to shift its custom chip business from Marvell (MRVL) to Broadcom (AVGO). According to The Information, Microsoft is in discussions to develop its next-generation chips with Broadcom, which would mean shifting its custom chip business away from Marvell.
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Notably, Broadcom will report its fourth-quarter fiscal 2025 results on December 11. So far this year, AVGO stock is up more than 68%. With analysts expecting solid growth in upcoming results and new partnership buzz building, investors are hoping for a strong finish to the year for Broadcom.
What Lies Ahead for Broadcom?
The possible shift comes as big tech companies rush to find dependable chip partners to support their fast-growing AI projects. Demand for custom semiconductors is surging, and Microsoft is among the companies racing to secure more supply. While Nvidia (NVDA) still dominates the market, Broadcom has become one of the few players seen as capable of competing at a meaningful scale.
If confirmed, this deal could hand Broadcom a significant win, deepen its foothold in the custom silicon market, and create new long-term revenue opportunities.
Recently, reports also surfaced that Meta (META) is considering using AI chips designed by Google (GOOGL). Google, for its part, is accelerating its efforts to compete more directly with Nvidia. Meanwhile, Broadcom is seeing a boost from growing demand for Google’s TPUs, which the company helps design and manufacture.
What It Means for AVGO Stock
If Microsoft shifts its custom chip development from Marvell to Broadcom, it could hand AVGO a major new long-term revenue stream. Custom silicon is becoming increasingly important for cloud giants, especially as AI workloads surge, and a partnership with Microsoft would deepen Broadcom’s footprint in one of the fastest-growing segments of the semiconductor market.
A deal of this scale would not only boost Broadcom’s chip revenues but also strengthen its position in the lucrative AI infrastructure supply chain. That’s exactly the type of catalyst investors look for when anticipating a sustained rally.
However, until the talks are finalized, the upside remains speculative. Any confirmation from Microsoft could trigger a strong reaction in AVGO shares. But until then, the market is waiting for clear details.
Is AVGO a Good Stock to Buy?
Currently, Wall Street has a Strong Buy consensus rating on Broadcom stock based on 22 Buys and two Holds. The average AVGO stock price target of $427.41 indicates 9.52% upside potential from current levels.
