Broadcom (AVGO) stock traded in the mid-$360s on August 20, 2026, following a 4.61% drop in the previous session that brought the closing price to $362.48 on August 19. The decline came as investors evaluated an expanded custom-chip partnership between Google and Marvell.
Google Competition and Market Impact
Marvell disclosed a custom-chip agreement with Google that includes a $12.2 billion equity warrant package tied to procurement targets through fiscal 2033. This development raised market concerns that Google may diversify its custom AI chip work across multiple suppliers rather than relying solely on Broadcom, which has traditionally supplied cloud customers with custom accelerators and networking products.
The announcement triggered a sharp sell-off that erased an estimated $87 billion in market value during the August 19 session. Broadcom shares dropped about 12.9% over a five-day span and entered a four-session losing streak before recovering modestly in early trading on August 20.
Valuation and Earnings Focus
Even after the recent pullback, Broadcom shares remained roughly 24.6% below their 52-week high of $481.57 reached in early June. The stock trades at a premium valuation of approximately 63 times trailing earnings and 25 times forward earnings, with one valuation model estimating fair value near $342.29.
Investors are also monitoring Broadcom's financing plans and debt following commentary linked to a bond-rating downgrade and concerns over an AI financing platform potentially reaching $370 billion by 2029. Attention now shifts to Broadcom's upcoming third-quarter 2026 earnings report, where analysts estimate earnings of $3.21 per share on $29.25 billion in revenue.
Core Networking Business
Despite rising competition for custom-chip contracts, Broadcom maintains a significant presence in data center networking through its Tomahawk Ethernet platform and network interface products, which serve high-speed 400G and 800G AI cluster connections. The company also derives revenue from broadband, wireless, and storage markets alongside its AI infrastructure offerings.
