Chipmakers Face Divergent Paths in AI Supply Chain

Major semiconductor firms posted exceptional quarterly results driven by artificial intelligence infrastructure spending, with revenue growth ranging from 37% to over 100% year-over-year. Nvidia reported $96.2 billion in revenue for the quarter ending July 26, while Micron’s sales quadrupled to $41.5 billion. These figures reflect a supply-constrained market where demand for data center chips and memory continues to outpace production capacity.

Despite the strong near-term performance, management teams are signaling different trajectories for the next fiscal years. Broadcom has secured supply to double its AI chip revenue, whereas Marvell expects its custom business to more than double. The divergence lies in valuation multiples, which currently price in varying degrees of future growth sustainability as the industry transitions from research and development to global deployment.

Nvidia and Broadcom Lead Growth

Nvidia’s data center segment generated $89 billion of its quarterly revenue, with management forecasting approximately 70% growth for fiscal 2028. This outlook is attributed to supply limitations rather than softening demand. At a valuation of roughly 14 times estimated earnings for the next fiscal year, the stock price reflects expectations that the company will maintain its position as the primary platform for AI computing, including chips, networking, and software.

Broadcom’s AI semiconductor revenue reached $16.7 billion in the quarter ending August 2, a 221% increase year-over-year. Custom accelerators accounted for 73% of this revenue, indicating a strong reliance on bespoke designs for major cloud providers. CEO Hock Tan stated that the company has secured the manufacturing supply to reach $115 billion in AI revenue in fiscal 2027 and $230 billion in fiscal 2028. The stock trades at about 18 times fiscal 2027 earnings, pricing in the successful delivery of these large-scale custom chip orders.

Micron’s Margin Expansion and Cyclicality

Micron Technology reported revenue of $41.5 billion for the quarter ending May 28, with non-GAAP gross margins surging to 84.9% from 39% a year earlier. This dramatic margin improvement is driven by the high demand for memory components essential to AI hardware. Guidance for the subsequent quarter indicates revenue of approximately $50 billion, suggesting that the current profit cycle remains robust despite the inherent cyclicality of the memory market.

At approximately 6 times analysts’ fiscal 2027 earnings estimates, Micron trades at a significant discount to its peers. This valuation implies that the market expects the current record profits to fade as the memory cycle normalizes. For a long-term hold, the investment case relies on the company maintaining its position in the high-margin AI memory segment while managing the inevitable downturn in commodity memory prices.

Marvell’s High-Growth Custom Strategy

Marvell Technology achieved revenue of $2.7 billion in the quarter ending August 1, with data center sales growing 46%. The company expects fiscal 2028 revenue to reach $18 billion, up from approximately $12 billion in the current fiscal year. This growth is predicated on its custom accelerator business, which is projected to more than double in size, mirroring Broadcom’s strategy but at a smaller scale.

Marvell commands the highest valuation among the group at about 33 times expected fiscal 2028 earnings. This premium price requires the company to consistently ramp up new design wins on schedule to justify the multiple. Unlike the more established platforms of Nvidia and Broadcom, Marvell’s trajectory is more sensitive to the timing of customer adoption and the competitive landscape for custom silicon.