Marvell shares lift as Google expands multi-year chip partnership
The semiconductor firm issued warrants to Google worth over $12 billion, linking equity vesting to custom chip orders through fiscal 2033.
Marvell Technology shares rose on Wednesday after the semiconductor firm announced an expanded multi-year commercial agreement with Alphabet’s Google. The deal solidifies Marvell’s position as a primary application-specific integrated circuit (ASIC) partner in the hyperscaler AI infrastructure sector, joining Broadcom in a market increasingly shifting away from off-the-shelf accelerators toward custom silicon to lower deployment costs.
Under the terms of the agreement, Marvell issued warrants to Google to purchase up to 58.97 million shares, a package valued at over $12 billion. The warrants carry an exercise price of $206.58, with vesting directly tied to future custom chip purchases. Specifically, equity vests in tranches linked to every $500 million in custom chip orders placed by Google through fiscal 2033.
The partnership involves developing tailored AI inference accelerators, storage controllers, network interfaces, and near-memory compute architectures specifically for Google’s Tensor Processing Unit (TPU) ecosystem. This performance-linked structure provides Google with a financial incentive to scale its custom silicon orders with Marvell, offering the semiconductor firm concrete multi-billion-dollar visibility into future revenue.
Despite the recent gains, Marvell stock remains down more than 25 per cent from its year-to-date high. The shares broke above their 50-day moving average on 19 August, a technical milestone backed by the long-term fundamental case of the new contract. However, investors remain cautious about short-term volatility following the single-day pop.
Valuation concerns persist, with Marvell shares currently trading at about 76 times forward earnings. This premium makes the stock more expensive to own than other leading AI names, including Nvidia, which trades at about 26 times forward earnings. The higher multiple reflects the market’s interpretation of Marvell’s future revenue visibility and its strategic importance in the AI infrastructure boom.
Wall Street consensus remains positive, with the rating on Marvell stock sitting at “Strong Buy.” The mean price target is approximately $268, indicating potential upside of roughly 15 per cent from current levels. Analysts are convinced the company will extend its gains in the back half of 2026, although this remains a forward-looking consensus rather than a confirmed outcome.
