Why Broadcom Stock Crashed Today

Why Broadcom Stock Crashed Today

Danny Vena, CPA, The Motley Fool

Wed, August 19, 2026 at 7:19 PM GMT+3 3 min read

Shares of Broadcom (NASDAQ: AVGO) turned lower on Wednesday, falling as much as 5.9%. As of 11:49 a.m. ET, the stock was still down 4.4%.

The catalyst that sent the semiconductor specialist lower was news that Marvell Technology (NASDAQ: MRVL) had struck a major deal with Broadcom's largest customer.

Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue »

An unexpected coup

In a regulatory filing on Wednesday, Marvell revealed it had struck an important deal with Google-parent Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG). As part of the agreement, Marvell will help the search giant develop custom semiconductors for artificial intelligence (AI), as well as a vast array of supporting accessories, including "AI inference accelerators, storage controllers, network interface controllers, memory interface controllers, and near-memory compute."

Perhaps more importantly, Marvell issued a warrant to Google, allowing it to purchase up to 58,970,907 shares of its common stock at $206.58 per share, according to the filing. The first 1.36 million warrant shares will vest in equal quarterly installments during the first year. The remainder will vest between its fiscal 2027 and 2033 in 240 equal tranches, one for each $500 million in custom products purchased.

Alphabet has long been Broadcom's biggest customer and a key development partner for Google's Tensor Processing Unit (TPU). Investors feared that the move would somehow cut into Broadcom's business with the search giant, but that belies the evidence to the contrary.

Back in April, Broadcom signed a major five-year AI chip deal with Alphabet to develop and build upcoming versions of Google's TPUs. As part of the deal, Broadcom would also supply networking and related components needed to build rack servers for Google's data centers.

When deals of this nature surface, fair-weather investors tend to sell first and ask questions later. It's worth remembering that Broadcom CEO Hock Tan recently stated that the company had "line of sight to achieve AI revenue from chips -- just chips -- in excess of $100 billion by 2027." That dwarfs the company's $64 billion in total revenue in 2025. It also helps highlight the magnitude of the growing AI-centric opportunity.

At 31 times forward earnings, Broadcom is attractively priced relative to the size of the opportunity. Nothing to see here, folks. Move along.

Should you buy stock in Broadcom right now?

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 are built for long-term growth and 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 $419,408!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,348,694!*

That performance is why people listen. With a track record of beating the S&P 500 by nearly 5x, Stock Advisor offers a distinct advantage. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built for the long haul.

See the 10 stocks »

*Stock Advisor returns as of August 19, 2026.

Danny Vena, CPA has positions in Alphabet and Broadcom. The Motley Fool has positions in and recommends Alphabet, Broadcom, and Marvell Technology. The Motley Fool has a disclosure policy.

Why Broadcom Stock Crashed Today was originally published by The Motley Fool