Broadcom's Twin Headwinds: A Rival's Google Win and a Growing Balance-Sheet Question

Broadcom shares drop 14% as Google expands Marvell partnership and $35B AI financing guarantees raise exposure concerns.

The sell-off gripping Broadcom has two distinct triggers, and neither is showing signs of letting up. The stock has shed roughly 14 percent over the past seven trading days, leaving the shares trading around €313 in Frankfurt — still more than a quarter below the 52-week peak of €429.60 reached earlier this year.

The first shock landed midweek when Marvell Technology disclosed an expanded custom AI chip partnership with Google. The agreement includes warrants on nearly 59 million Marvell shares at $206.58 apiece — a package worth roughly $12.2 billion — with potential revenue of up to $120 billion through fiscal 2033. Marvell's stock jumped as much as 10 percent on the news. Broadcom, by contrast, slid about 5 percent on the Nasdaq, with the selling continuing into Thursday as investors digested a second concern: the company's guarantee exposure tied to a $35 billion AI infrastructure financing platform backed by Apollo and Blackstone.

The Google development cuts to the heart of Broadcom's custom-chip franchise. The company currently commands more than 70 percent of the custom AI chip market and holds its own Google contract running through 2031. But Macquarie projects Google's contribution to Broadcom's business could slide from roughly 95 percent this year to around 65 percent by 2028 — a sign the hyperscaler is deliberately broadening its supplier base. RBC analysts estimate Google's TPU procurement from Broadcom and MediaTek could reach $80 billion to $90 billion next year, a prize Marvell now has its sights on.

Not everyone reads the Marvell deal as an existential threat. UBS and Barclays push back on the notion that Broadcom's TPU business faces imminent damage, framing the shift as structural rather than acute. One industry analyst characterized the Marvell agreement as expanding the overall market rather than displacing Broadcom. Still, the optics are awkward for a company that has long enjoyed near-captive relationships with its biggest custom-chip customers.

The second source of anxiety carries more balance-sheet weight. Bank of America warns Broadcom's guarantees on the AI financing platform could balloon to as much as $370 billion in exposure by mid-2029. The maximum liability from the initial transaction currently stands at $29 billion, rising to roughly $42 billion in a total-default scenario, or around $10.5 billion assuming a 25 percent default rate. Those figures recast the company's risk profile: Broadcom is increasingly behaving less like a pure semiconductor play and more like a lender with meaningful credit exposure.

The operational story, meanwhile, remains robust. In the second quarter of fiscal 2026, Broadcom earned $9.3 billion, up 88 percent year over year, on revenue of $22.2 billion — a 48 percent gain. AI semiconductor revenue alone jumped 143 percent to $10.8 billion, and management has already guided to $16 billion for the current quarter. For the third quarter, consensus estimates call for revenue of $29.25 billion, up 80 percent, with adjusted earnings per share of $3.21, a projected 89 percent increase.

That fundamental strength explains why Wall Street remains largely constructive. Citigroup, Goldman Sachs and TD Cowen all carry buy ratings with price targets between $500 and $525, while the broader analyst consensus sits at $515.61 — implying upside of roughly 42 percent from pre-sell-off levels. The technical picture is less forgiving: the stock trades 7.6 percent below its 50-day moving average, and the relative strength index of 35.4 points to an ongoing, if not yet exhausted, wave of selling. On the insider front, the picture is mixed — Jones Kertz & Associates trimmed its position in the second quarter, while ARK Investment Management added more than 55,000 shares during the dip.

The September 2 earnings report now carries outsized significance. A beat on both revenue and guidance would likely relegate the Marvell episode to a footnote and reaffirm the dominance of Broadcom's AI growth engine. But if management's commentary hints at softening custom-chip demand or fails to address the financing-guarantee concerns with conviction, the stock could lose its premium valuation as a pure semiconductor name. With 30-day annualized volatility running at 44 percent, investors are in for a bumpy ride until then.