Shares of Broadcom Inc. (NASDAQ: AVGO) slipped approximately 2% in premarket trading on Wednesday after Alphabet Inc.'s Google broadened its roster of custom-chip suppliers, adding Marvell Technology Inc. (NASDAQ: MRVL) to its collaboration on accelerators, networking, and memory technologies. The move signals a shift in Google's supplier strategy, though it does not indicate any cancellation of existing Broadcom projects.
Marvell shares surged over 11% in response, reflecting investor enthusiasm for the expanded partnership. Google received a warrant from Marvell for 58,970,907 shares at an exercise price of $206.58, potentially worth about $12.2 billion if fully exercised, contingent on meeting purchase milestones through fiscal 2033.
Adding to the narrative, Bank of America analysts highlighted a new figure in the Broadcom conversation: an AI-financing mechanism powered by Broadcom technology could grow to $370 billion in senior debt by 2029. That estimate is 6.6 times Broadcom's projected $56 billion in fiscal 2026 AI revenue, underscoring the scale of potential deployment rather than immediate revenue impact.
The financing platform, launched in June by Broadcom, Apollo Global Management (NYSE: APO), and Blackstone (NYSE: BX), aims to support AI infrastructure. Its first deal, valued at $35 billion, will fund over one gigawatt for Anthropic, with consortium targets exceeding 20 gigawatts worldwide by 2028. The $370 billion figure is an initial estimate and does not represent Broadcom's sales projection or direct corporate debt.
The debt market appears capable of absorbing the current expansion. AI-linked bond issuance surpassed $220 billion from the start of the year to mid-August, more than double the prior year's pace. Goldman Sachs estimates the overall impact on borrowing costs at about five basis points, suggesting manageable strain on credit markets.
Broadcom's latest quarterly results remain robust. Fiscal second-quarter revenue climbed 48% year-over-year to $22.19 billion, with AI semiconductor revenue surging 143% to $10.8 billion. Free cash flow reached $10.26 billion, representing 46% of revenue. For the third quarter, management guided revenue of approximately $29.4 billion (an 84% increase) and AI semiconductor revenue of $16 billion, signaling growth of over 200%.
CEO Hock Tan emphasized continued momentum, though he cautioned that projections are forecasts and subject to revision. Analyst sentiment remains bullish, with JPMorgan, KeyBanc, and Bernstein all maintaining overweight or outperform ratings, with price targets ranging from $550 to $580, implying upside of 44% to 53% from the August 18 close of $380.00.
However, those targets were set before the Marvell announcement, leaving investors to weigh the implications of customer diversification against potential pricing pressure. The main risk is execution: while increased financing could widen the market for Broadcom's systems, heightened competition may erode market share. Both trends could accelerate simultaneously.
Risks to the $370 billion estimate include uncertain funding, rising interest rates, softer customer demand, or project delays. Google's expanded relationship with Marvell may also intensify pricing competition before any significant impact on Broadcom's revenue becomes apparent.
