TLDR
- Marvell stock dropped 6% on Monday following reports of potential business losses to competitors
- Microsoft is reportedly in talks with Broadcom about custom chip designs, potentially moving work away from Marvell
- Benchmark downgraded Marvell from Buy to Hold over concerns Amazon shifted Tranium 3 and 4 chip designs to Alchip
- The analyst believes Amazon’s design loss explains Marvell’s modest 20% XPU growth projection for 2026
- Marvell reportedly waived engineering fees to secure Meta chip design work targeting 2027 launch
Marvell Technology shares fell 6% on Monday as reports surfaced about the company potentially losing key cloud computing chip contracts. Two separate developments raised questions about Marvell’s position with major tech customers.
Marvell Technology, Inc., MRVL
The Information reported Microsoft is holding discussions with Broadcom about designing future custom chips. This move could redirect business that might have gone to Marvell.
Benchmark analyst Cody Acree downgraded Marvell from Buy to Hold. He cited strong conviction that Amazon moved its Tranium 3 and Tranium 4 AI chip programs to Taiwanese competitor Alchip.
Amazon Design Loss Concerns
Acree’s downgrade came after two days of industry meetings during a Silicon Valley tour. The analyst said he has “a high degree of conviction” that Marvell lost both Amazon chip designs to Alchip.
This loss could explain Marvell’s projection of just 20% XPU growth for calendar year 2026. That’s a relatively modest forecast in the booming AI chip market.
Marvell has stated it won’t experience an “air pocket” in Amazon revenue next year. But Acree thinks this might just reflect continued Tranium 2 volumes.
The company may not be winning meaningful roles in Amazon’s newer chip designs. That’s a worrying sign for future growth.
Microsoft-Broadcom Discussions
The Microsoft news added to Monday’s pressure. Discussions between Microsoft and Broadcom about next-generation custom chips represent another potential setback.
Microsoft ranks among the largest cloud providers. Losing custom chip work from Microsoft would be another blow to Marvell’s hyperscaler business.
The company relies heavily on these large tech customers for its custom silicon business. Competition from Broadcom and others is clearly heating up.
Marvell’s Response Strategy
Marvell is trying to secure new business elsewhere. The Information reported the company recently approached Meta Platforms with a cost-cutting proposal.
Marvell offered to waive part of an upfront engineering fee for a chip design project. Meta plans to launch this chip in 2027.
The move shows Marvell is willing to sacrifice some margin to win new contracts. But it also suggests the competitive landscape is forcing the company to make concessions.
Pricing pressure could squeeze Marvell’s profitability going forward. The company faces tough decisions about where to compete.
The custom chip market for cloud providers continues to grow. But Marvell appears to be losing ground to rivals like Broadcom and Alchip.
Benchmark’s downgrade reflects growing concerns about Marvell’s competitive position. The analyst’s field research uncovered troubling signs about the Amazon relationship.
Acree’s comments suggest the loss of Amazon’s Tranium 3 and 4 designs is real and material. These programs represent future revenue that Marvell was counting on.
The 20% XPU growth forecast for 2026 now looks more like a ceiling than a floor. Marvell may struggle to exceed that number without major new wins.
Meta’s 2027 chip launch timeline means any revenue from that project remains years away. Marvell needs nearer-term wins to offset the Amazon losses.
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