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Marvell Technology Shares Jump on AI Chip Deal With Google

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Marvell Technology Shares Jump on AI Chip Deal With Google

Marvell Technology (MRVL) shares jumped Wednesday after the chip designer entered into a deal that would allow Alphabet's (GOOG, GOOGL) Google to purchase up to $12.18 billion of Marvell shares as part of a collaboration.

In connection with the collaboration, Marvell issued a warrant to Google for the purchase of up to nearly 59 million common shares at an exercise price of $206.58 per share, according to a filing with the US Securities and Exchange Commission.

Late last month, Marvell signed a commercial deal pertaining to its development of custom semiconductor products to Google. The expanded partnership covers various custom silicon programs linked to the tensor processing unit, or TPU, ecosystem, including artificial intelligence accelerators and storage controllers, Marvell said in the Wednesday filing.

TPUs are Google's application-specific chips used to accelerate machine learning workloads.

Roughly 1.4 million of the warrant shares vest in equal quarterly installments in the first year, while the rest vest based on discretionary purchases by or on behalf of Google and its affiliates from Marvell's fiscal 2027 third quarter through 2033, according to the filing.

In April, Broadcom (AVGO) agreed to produce AI chips for Google. That deal included a supply assurance agreement for Broadcom to provide networking and other components for Google's next-generation AI racks through up to 2031.

Marvell shares surged 8.4% in Wednesday late-afternoon trade, while Alphabet's class A and C shares were down 0.2% each. Broadcom shares fell 3.9%.

Earlier this week, UBS Securities raised its estimates on Marvell ahead of its fiscal second-quarter results, citing accelerating AI spending by major hyperscalers, strong demand for optical and networking products, and momentum in its custom chip programs with Microsoft (MSFT) and Google.

"We continue to view (Marvell) as one of the more attractive ways to participate in the custom silicon, optical connectivity, and AI infrastructure buildout themes," the brokerage said in a note to clients.

Marvell is scheduled to report its second-quarter results Aug. 27.

Price: $233.29, Change: $+17.29, Percent Change: +8.00%

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