Marvell Technology (NASDAQ:MRVL) slid 6% on Monday amid growing concerns that the semiconductor firm may be losing key hyperscaler design wins. The drop followed a report indicating Microsoft (NASDAQ:MSFT) is exploring future custom chip development with Broadcom (NASDAQ:AVGO), as well as a downgrade from Benchmark over worries about Amazon (NASDAQ:AMZN) shifting away from Marvell.
According to The Information, Microsoft has begun talks with Broadcom about designing next-generation custom chips, a move that could divert business that might otherwise have gone to Marvell.
Pressure intensified after Benchmark analyst Cody Acree cut his rating on Marvell from Buy to Hold, citing “a high degree of conviction” that Amazon has moved its Tranium 3 and Tranium 4 AI chip programs to Taiwanese rival Alchip — a development Acree believes explains Marvell’s relatively modest forecast for 20% XPU growth in 2026.
Acree wrote, “Following two days of extensive industry meetings during our recent Silicon Valley bus tour, we are downgrading our rating on Marvell from Buy to Hold, as we now have a high degree of conviction that the company has lost both Amazon’s Tranium 3 and 4 designs to its Taiwanese competitor, Alchip. We expect this is the primary factor in the company’s projected slowing to only 20% XPU growth in CY26.”
He added that although Marvell has suggested it won’t see an “air pocket” in Amazon-related revenue next year, this could simply reflect continued supply of Tranium 2 volumes rather than meaningful involvement in Amazon’s newer designs.
The Information also reported that Marvell recently tried to deepen its relationship with Meta Platforms (NASDAQ:META), offering to waive part of an upfront engineering fee in an effort to secure a new chip design project. Meta is targeting 2027 for launch of this chip.