NVIDIA Huawei has been a leading brand in the artificial intelligence (AI) chip market for more than three years, with excellent control over the field thanks to its graphics processing unit (GPU) technological advantage over rivals.
After all these years, Nvidia still controls an impressive 81% of the AI chip market. Importantly, the company appears poised to maintain its dominance in the field with its upcoming Vera Rubin chip, which is expected to significantly reduce AI model training and inference costs. Not surprisingly, major hyperscalers are committing to deployments on Nvidia’s next-generation AI chips when they launch later this year.
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However, Nvidia’s status as the world’s largest company by market capitalization and concerns about the increasing competition the company may face could affect its stock price. So it’s no surprise to see smaller competitors like this Mayville Technology(NASDAQ: MRVL) Outperform Nvidia stock in 2026.
Let’s see why this happens.
Image source: NVIDIA.
Marvell Technology designs application-specific integrated circuits (ASICs), custom processors tailored for specific tasks. These custom processors are increasingly popular among AI hyperscalers due to their cost-efficiency and performance advantages over Nvidia-designed graphics processing units (GPUs).
Custom AI processors are designed to perform specific tasks and therefore consume less power and are faster than the general-purpose computing of GPUs. That’s why ASICs’ share of AI servers is expected to jump from 20.9% in 2025 to 27.8% this year, according to market research firm TrendForce. At the same time, GPU share is expected to shrink from 75.9% last year to 69.7% in 2026.
Marvell enables investors to take advantage of the expanding market for custom AI processors. The company aims to quadruple its share of custom AI processors by 2028 from around 5% in 2023. In addition, its addressable market expanded from US$21 billion to US$94 billion during the same period, driven by incremental opportunities for customized AI chips.
All of which explains why Marvell’s revenue for its recently concluded fiscal 2026, which ended last month, is expected to rise nearly 42% from the previous year to $8.18 billion, with earnings per share also expected to jump a whopping 80% to $2.83 per share. Given the growing share of custom processors in the AI chip space and the huge spending on AI data centers, repeat performance is likely again this year.
Even better, Marvell is well-positioned to capitalize on custom AI chip opportunities because of its broad customer base, which includes letter, Amazonand Microsoft. Additionally, Marvell noted that it is pursuing more than 10 custom AI chip customers and sees opportunities in the long term to monopolize more than 50 chip designs among its potential customer base.
This will be a big jump from the 18 chip designs that Marvell has already won among four major US hyperscale manufacturers as well as emerging hyperscale manufacturers. So don’t be surprised to see Marvell’s revenue and earnings grow faster than analysts expect in the new fiscal year.
Marvell Technology’s median 12-month price target is $119, indicating potential upside of 50%. This is higher than the 30% expected upside for Nvidia stock over the next 12 months (based on the stock’s median price target of $250).
The stock may indeed post bigger gains than Nvidia, as it could easily beat analysts’ forecasts of 23% earnings growth for fiscal 2027. Marvell is set to release fiscal 2026 fourth-quarter results on March 5, and the stock is likely to rise on solid data and better-than-expected guidance. Another point worth noting is that Marvell trades at 10 times sales, which is a significant discount to Nvidia’s 24 times sales multiple.
Therefore, the market is likely to value Marvell’s stock at a premium due to its strong performance, which is why the custom AI chip designer will be able to outperform its more prominent peers in 2026.
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Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool holds and recommends Alphabet, Amazon, Marvell Technology, Microsoft and Nvidia. The Motley Fool has a disclosure policy.
Prediction: This custom AI chip stock will surpass Nvidia in 2026
