Nvidia Is Up 7% in 2026 While Marvell Technology Has Nearly Doubled. Here's Why.

No company has benefited from the artificial intelligence (AI) boom more than Nvidia (NASDAQ: NVDA). In 2020, the chipmaker's market cap was less than $200 billion. In April 2026, it surpassed $5 trillion. And even with all that growth behind it, Nvidia continues to perform well. The stock rose by 7% over the first four months of 2026, outpacing the S&P 500.

But this year, Nvidia's returns have paled in comparison to those of Marvell Technology (NASDAQ: MRVL), a fellow chipmaker that's up a staggering 95%. That difference in their performances reflects a key shift in how major data center operators are spending on AI chips.

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In the early stages of the AI build-out, Nvidia graphics processing units (GPUs) were the most popular parallel processors when it came to handling the workloads of training and running large language models. They're still in high demand, but hyperscalers have been developing their own custom AI chips, too, for a few reasons.

These custom chips -- broadly called application-specific integrated circuits (ASICs) -- are designed to be narrowly suited to a company's specific processing needs, in contrast to the general-purpose chips from Nvidia. That means ASICs can be made less expensively and operated at lower costs. Moreover, using these chips also allows tech companies to reduce their dependence on a single supplier.

Since 2016, Alphabet has been partnering with the largest ASIC designer, Broadcom, to design its custom Tensor Processing Units, and the two companies recently extended their agreement through 2031. In April, though, reports came out that Alphabet would also be working with Marvell Technology. Hyperscaler Amazon has a partnership deal that runs through 2029 with Marvell to make its Trainium chips.

Marvell calls its custom AI accelerators XPUs, and sales of them are climbing rapidly. In the company's fiscal 2026, which ended Jan. 31, its data center revenue grew by 46% to $6.1 billion.

Even Nvidia is on board. It announced a strategic partnership with Marvell in March, and made a $2 billion investment in it. The deal connects the two semiconductor companies through NVLink Fusion, which allows customers to develop semi-custom AI infrastructure.

Nvidia is still in good shape. It has continued to beat revenue expectations every quarter, and I expect that pattern to continue when it reports its fiscal 2027 first-quarter results on May 20. CEO Jensen Huang also said he expects a total of $1 trillion in orders for its Blackwell and Vera Rubin platforms across 2026 and 2027.

However, the hyperscalers that account for a sizable portion of Nvidia's revenue are investing heavily in custom chips. Counterpoint Research projects that shipments of custom application-specific integrated circuits are going to triple by 2027 compared to 2024 levels. Makers of custom chips, including Marvell and Broadcom, should capture a sizable chunk of that growth. I still consider Nvidia one of the top AI stocks, but I expect Marvell to outperform it over the next five years.

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Lyle Daly has positions in Alphabet, Broadcom, and Nvidia. The Motley Fool has positions in and recommends Alphabet, Amazon, Broadcom, Marvell Technology, and Nvidia. The Motley Fool has a disclosure policy.

Nvidia Is Up 7% in 2026 While Marvell Technology Has Nearly Doubled. Here's Why. was originally published by The Motley Fool