|
|
|
|
|||||
|
|
|
Microsoft might be about to switch its chips business from Marvell to Broadcom.
It also might not.
Shares of semiconductor company Broadcom (NASDAQ: AVGO) jumped 3.9% through 1:45 p.m. ET Monday on some positive AI news.
According to a report published by The Information late Friday, Microsoft (NASDAQ: MSFT) -- which has been having Marvell Technology (NASDAQ: MRVL) build its custom-designed artificial intelligence chips -- is now looking to shop this business to Broadcom instead.
Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »
Image source: Getty Images.
Not everyone is buying the report, however. JPMorgan analyst Harlan Sur, for example, is quoted today insisting Microsoft's contract with Marvell remains "solidly intact," as too is Marvell's similar contract with Amazon.com (NASDAQ: AMZN). Regardless, investors today are buying the rumor about Broadcom's good fortune -- just in case it turns out The Information was correct.
They're also selling Marvell stock, which is down more than 7%.
Investing in a stock based on an unconfirmed rumor can be dicey. You're basically paying up for earnings that might not actually exist. Before doing this, investors should consider what they'll end up owning if Broadcom does not, in fact, win a big batch of business from Microsoft.
And what they discover might worry them.
Priced north of $1.8 trillion, Broadcom stock sells for a staggering 74 times trailing free cash flow, and an even more nosebleed 97.5 times trailing earnings. And granted, Broadcom is growing fast already, and might grow even faster with new business from Microsoft. As things stand today, though, most analysts have the stock pegged for only about 31% annual long-term earnings growth -- and therefore a PEG ratio of more than 3.0.
All I can say about that is... if Broadcom doesn't end up winning Microsoft's business, the stock is going to look terrifically overpriced.
Before you buy stock in Broadcom, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Broadcom wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $540,587!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,118,210!*
Now, it’s worth noting Stock Advisor’s total average return is 991% — a market-crushing outperformance compared to 195% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.
*Stock Advisor returns as of December 8, 2025
Rich Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon and Microsoft. The Motley Fool recommends Broadcom and Marvell Technology and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
| 20 min | |
| 29 min | |
| 31 min | |
| 37 min | |
| 37 min | |
| 44 min | |
| 59 min | |
| 1 hour | |
| 1 hour | |
| 1 hour | |
| 1 hour | |
| 1 hour | |
| 1 hour | |
| 1 hour | |
| 2 hours |
Join thousands of traders who make more informed decisions with our premium features. Real-time quotes, advanced visualizations, backtesting, and much more.
Learn more about FINVIZ*Elite