Qualcomm Drops 8% on ByteDance ASIC Deal, Marvell Falls 10% as Custom-Silicon Stocks Slide
Shares of Qualcomm (NASDAQ:QCOM | QCOM Price Prediction) are down 8% to $201 in Tuesday morning trading, while Marvell Technology (NASDAQ:MRVL) shares are off 10% to $260. The catalyst centers on news that ByteDance is moving forward with a custom AI silicon (ASIC) deal that touches Qualcomm directly, reshaping the merchant custom-silicon narrative across the sector.
The selling action looks counterintuitive given the strategic upside the ByteDance partnership could deliver for Qualcomm. Yet, sector-wide pressure on custom-silicon names is amplifying the move and dragging Marvell stock down alongside it, raising fresh questions about how investors value merchant ASIC providers in an era of hyperscaler self-design.
ByteDance Deal Stirs a Despite or Because Of Debate
The reported ByteDance engagement extends Qualcomm’s reach beyond smartphones and into data center AI silicon. That fits with what Qualcomm CEO Cristiano Amon stated on the company’s Q2 FY2026 call: “We are equally excited by our entry into the data center, where a leading hyperscaler custom silicon engagement is on track for initial shipments later this calendar year.” The corresponding 8-K filing from late April detailed handset weakness offset by record automotive revenue.
The Qualcomm story now extends beyond mobile dependency. Handset revenue was down 13% year over year (YoY) to $6.02 billion in Q2 FY2026, while automotive climbed to a record $1.33 billion, up 38% YoY. Diversification into data center silicon can help reduce concentration in smartphones, where Apple‘s (NASDAQ:AAPL) in-house modem ambitions remain a long-term concern.
Investors appear to be weighing several offsetting concerns on Qualcomm stock. Export regulation risk on advanced AI chips tied to a Chinese customer is a legitimate question, and a classic sell-the-news reaction can hit even strategically positive announcements. Margin and competitive worries in the custom-silicon market are also in play.
The longer-term setup still looks intriguing, though. QCOM stock is up 18% year to date (YTD), and the company’s Investor Day on June 24 will detail its data center and Physical AI roadmap. Qualcomm trades at a forward P/E ratio of 20x, with an analyst consensus price target near $180.48.
Marvell Slides as the Custom-Silicon Trade Unwinds
Marvell Technology sits at the heart of the custom-AI-ASIC theme, so any signal of hyperscaler or large customer vertical integration tends to weigh on MRVL stock. The company flags this in its own filings, citing the “Risk that customers develop own solutions or vertically integrate” as a tangible factor for the business.
The fundamental backdrop remains strong, however. Marvell Technology reported Q1 FY2027 revenue of $2.42 billion, up 28% YoY, and CEO Matt Murphy described the data center business as “on fire.” The company guided Q2 FY2027 revenue near $2.7 billion, with custom silicon projected to exceed $10 billion by fiscal 2029.
Marvell Technology’s data center segment generated $1.83 billion in Q1 FY2027 revenue, with that segment representing 76% of total sales. The company has expanded through acquisitions of Celestial AI and XConn Technologies for photonic fabric and chiplet connectivity, building a connectivity and custom-compute platform that also concentrates exposure to hyperscaler decision-making.
MRVL stock has surged 210% YTD, helped by NVIDIA (NASDAQ:NVDA) CEO Jensen Huang publicly calling Marvell Technology the “next trillion-dollar company” and the announcement that Marvell will join the S&P 500 effective June 22. That parabolic run leaves Marvell Technology stock more sensitive to negative custom-silicon headlines than fundamentals alone might suggest.
What Investors Should Watch Next
The custom-silicon trade has been one of the most crowded positionings in tech, and big single-day drawdowns can shake out leveraged holders quickly. Semiconductor names may be vulnerable to a synchronized unwind, and this dynamic appears to be playing out across Qualcomm stock, Marvell stock, and peers including Broadcom (NASDAQ:AVGO).
Investors may want to size their positions carefully and watch for whether Qualcomm frames the ByteDance relationship and export-control exposure ahead of its June 24 Investor Day. For Marvell Technology, the next signal on whether AI-ASIC demand is broadening could come from hyperscaler capex commentary and follow-on custom-silicon customer wins.
The bull case rests on Qualcomm building a durable data center franchise and Marvell extending its custom-silicon lead with Amazon‘s (NASDAQ:AMZN) Trainium and Microsoft‘s (NASDAQ:MSFT) Maia programs. The bear case centers on geopolitical risk, customer in-housing, and stretched valuations, with Marvell Technology stock trading at a forward P/E ratio of 65x. Both narratives may be tested in the days to come.
