(Reuters) - Broadcom's ( AVGO ) shares soared 12% in premarket trading on Friday as the chipmaker's strong revenue forecast helped restore some confidence in AI chip demand after a bruising sector-wide selloff following rival Marvell Technology's ( MRVL ) bleak outlook.

"Given the anxiety about AI conditions in general, these results should come as a relief," according to Morgan Stanley analysts.

Broadcom ( AVGO ) CEO Hock Tan said the company expects revenue of $4.4 billion in the second quarter for its artificial intelligence semiconductors as hyperscale customers invest in custom AI chips for data centers.

Marvell's ( MRVL ) shares closed down 19.8% on Thursday, marking their worst day in more than two decades, after an in-line revenue forecast.

Big Tech's push to diversify beyond Nvidia's ( NVDA ) pricey and supply-constrained AI processors has remained a tailwind for Broadcom ( AVGO ).

"Perhaps the AI trade isn't as dead as feared ... but amid AI nervousness, (Broadcom ( AVGO )) management's view of the future is becoming even more positive," Bernstein analysts said.

Reuters reported last month OpenAI was working with Broadcom ( AVGO ) to finalize its first custom chip design and reduce its reliance on Nvidia ( NVDA ).

Broadcom's ( AVGO ) shares more than doubled in 2024, but have declined about 23% so far this year.

Peers Nvidia ( NVDA ), Micron Technology ( MU ), Advanced Micro Devices ( AMD ) and Marvell ( MRVL ) rose between 0.4% and 1.7% in premarket trading on Friday.

Broadcom ( AVGO ) has a 12-month forward price-to-earnings ratio of 26.58, compared with 23.46 for Nvidia ( NVDA ) and 24.50 for Marvell ( MRVL ), according to data compiled by LSEG.