Marvell Technology (MRVL) -) shares turned lower in late Thursday trading , following solid earlier gains, after Google (GOOGL) -) described Broadcom (AVGO) -) as an "excellent partner" in AI cloud collaboration following a report that suggested it could be replaced.
The Information reported that Google, which is ramping-up its AI investments in order to win back market share it lost earlier this year to Microsoft (MSFT) -), is looking to replace Broadcom with Marvell to develop and advanced chip known internally as 'Granite Redux'.
The report also suggested Google would drop Broadcom, following a dispute over chip pricing, and design its own tensor processing units in-house.
"We are productively engaged with Broadcom for the long term. Our work to meet our internal and external Cloud needs benefit from our collaboration with Broadcom; they have been an excellent partner and we see no change in our engagement," a Google spokesperson said in an emailed statement to TheStreet.
Late last month, Marvell issued a muted near-term outlook that clouded solid second quarter earnings, but noted that AI demand is likely to continue to drive sequential revenue gains that are higher than anticipated,
Broadcom's near-term outlook was similarly weak, tied in part to softer corporate cloud investment trends, but also said that AI chip sales are on track to represent around 15% of overall revenues this fiscal year, and 25% by the end of fiscal 2025, suggest a solid longer-term profit track for a company that enjoys a gross margin of more than 75%.
Marvell shares were marked 2.1% lower in late-day trading to change hands at $51.80 each. Broadcom shares, meanwhile, fell 2.75% to $807.80 each, a move that would still leave the stock with a near 45% gain for the year.
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