Broadcom stock hit an all-time high during trading Monday after new encouraging signs that the company’s custom chips are all the rage in the AI field. The latest development comes from technology website The Information, which reports that Microsoft may be considering moving its custom chip business from Marvell Technology to Broadcom. The report is the latest in a recent string of good news for Broadcom, which will report quarterly results after the close of trading on Thursday. Unsurprisingly, Marvell’s stock price fell more than 7%. Also weighing on Marvell stock was a note from Benchmark in which analysts called with “high confidence” that Amazon may also consider transferring development of future generations of Trainium chips from Marvell to Taiwanese design firm Aichip. Overall, Broadcom shareholders should be happy with the company’s position in the custom AI market, as specialty silicon emerges as a competitor to Nvidia’s general-purpose AI chips, the gold standard for running artificial intelligence workloads. At the same time, Marvell’s weakened position further positions Broadcom as the go-to company for custom chips. This Microsoft-related information report follows the success of Google’s tensor processing unit, which was co-developed by Broadcom. TPUs have been praised in recent weeks following the release of Gemini 3, Alphabet’s Google’s latest large-scale language model. Gemini 3, which rose to the top of app leaderboards, is trained and runs entirely on Google’s custom TPUs. A few weeks ago, The Information reported that Meta Platforms is considering using Google’s TPUs for its data centers in 2027. AVGO YTD Mountain Broadcom YTD It’s great to see Broadcom’s stock price rising, but we don’t like it when the stock goes into an earnings release, as it signals high expectations. But we understand the move because all this news makes it clear that Broadcom’s custom silicon business is poised for even more profits. Don’t expect to hear much about these two recent developments on the post-earnings conference call. But I think the talk about demand for custom chips will revolve around the interest Broadcom has seen since the launch of Gemini 3. Outside of custom chips, interest will be high in Broadcom’s networking business, which has seen incredible growth over the past year, especially given the growing need for high-bandwidth networking solutions due to the explosion in AI adoption with the introduction of inference models and agent solutions. On the legacy front, given that Apple is the company’s major wireless customer, we expect to see gradual improvement due to seasonality as the company’s wireless revenue is closely tied to the iPhone sales cycle. On the software side, we continue to expect strong growth and margins from VMware, and we’re interested to hear about further synergies and cross-selling opportunities the team is working on. (The Jim Cramer Charitable Trust is long AVGO, MSFT, AMZN, META. See here for a complete list of stocks.) As a subscriber to Jim Cramer’s CNBC Investment Club, you will receive trade alerts before Jim makes a trade. After Jim sends a trade alert, he waits 45 minutes before buying or selling stocks in his charitable trust’s portfolio. If Jim talks about a stock on CNBC TV, he will issue a trade alert and then wait 72 hours before executing the trade. The above investment club information is subject to our Terms of Use and Privacy Policy, along with our disclaimer. No fiduciary duties or obligations exist or arise from your receipt of information provided in connection with the Investment Club. No specific results or benefits are guaranteed.
