Marvell gives Google right to buy $12.2B stake in AI chip pact

Marvell Technology ↗ 8.13% disclosed Wednesday that it has issued Alphabet's ↘ 0.02% Google a warrant to purchase up to 58,970,907 shares of common stock at $206.58 per share — a stake worth approximately $12.18 billion — as part of a binding agreement to develop custom semiconductors for the search giant's AI infrastructure. Marvell shares surged more than 11% in premarket trading on the news, while rival Broadcom ↘ 4.09% fell over 3%.bloomberg+1

Deal Structure

The commercial agreement, executed on July 29, 2026, covers a comprehensive range of custom silicon programs spanning Google's tensor processing unit ecosystem, including AI inference accelerators, storage controllers, network interface controllers, memory interface controllers, and near-memory computing technologies.tradingview+1

The warrant, issued on August 18, is exercisable until August 18, 2033. Of the total shares, 1,360,867 vest in equal quarterly installments during the first year. The remaining shares vest in 240 tranches, with one tranche unlocking for every $500 million in custom product revenue that Marvell recognizes from Google between the third quarter of fiscal 2027 and the end of fiscal 2033. The structure ties Google's equity upside directly to its purchasing commitment — the more custom chips Google buys, the more shares it can acquire at the locked-in price.investing+2

Competitive Implications

The deal intensifies competition in the custom AI chip market. In April, Broadcom signed a long-term agreement with Google to develop and supply future generations of custom AI chips and components for next-generation AI racks through 2031. Analysts view Marvell's entry not as a replacement for Broadcom but as Google diversifying its supply chain to meet surging demand for alternatives to Nvidia's ↘ 0.03% general-purpose GPUs.tradingkey+1

This is not Marvell's first equity-linked hyperscaler partnership. In December 2024, the company struck a similar warrant agreement with Amazon Web Services, though that deal was far smaller at 4.18 million shares. Marvell now holds custom chip relationships with three of the largest cloud infrastructure providers.cryptobriefing

Analyst Outlook

Ahead of Marvell's August 27 earnings report, Stifel reiterated a Buy rating with a $350 price target, expecting the company to surpass its $2.70 billion revenue estimate for the July quarter. TD Cowen raised its target to $225 from $200 on August 17, citing durable market share in optical digital signal processors. Implied moves of roughly 14% were already priced into the options market around the earnings event, underscoring expectations for elevated volatility.tradingpedia+1