Marvell Gives Google a Warrant Worth Up to $12.2 Billion in Expanded Custom Chip Deal

The Deal, in Plain Terms

Marvell Technology disclosed on August 19 that it expanded its custom-chip partnership with Google's parent Alphabet in an unusual way. Instead of cash, Google received a warrant to buy up to 58,970,907 Marvell shares at $206.58 each, worth roughly $12.18 billion if fully exercised, according to Tikr and 24/7 Wall St.

That number does not vest all at once. A small slice, about 1.36 million shares, unlocks in equal quarterly pieces over the first year, according to ts2.tech and rollingout. The remaining roughly 57.6 million shares are split into 240 tranches, with one tranche releasing for every $500 million in custom-chip revenue Marvell books from Google, running through fiscal 2033.

Full vesting would require Google to place about $120 billion in cumulative orders, per ts2.tech's math, which is 14.6 times Marvell's entire fiscal 2026 revenue. If Google exercised the whole warrant, it would become Marvell's fifth-largest shareholder, Tikr reported.

What Marvell Is Actually Building

Google still designs the core TPU compute die with Broadcom, according to Tikr. Marvell's expanded work covers what sits around it: AI inference accelerators, storage controllers, network interface controllers, memory-interface controllers, and near-memory compute.

Marvell CEO Matt Murphy described this as "XPU attach" business at the Six Five Summit on August 25, saying the company now has 15 to 18 different designs across all four big hyperscalers, with content that can run $500 to $2,000 per accelerator, per Tikr's account of his remarks. Murphy said the bigger opportunity is still ahead: "You still haven't seen mass deployments of GPUs and AI accelerators scaled up. You haven't seen it. This is all in front of us."

The Milestone Wall Street Cares About

With this deal, Marvell now designs custom AI silicon for all three of the largest U.S. cloud companies: Amazon, Microsoft, and Google, according to Yahoo Finance. No other independent chip designer can say that. Marvell has spent years as the clear number two to Broadcom in custom silicon, and landing all three hyperscalers is being read on Wall Street as a shift in that pecking order.

The deal also eased a specific worry. Marvell had reportedly lost design work on Amazon's next-generation Trainium chips to a rival, according to Yahoo Finance. GF Securities analyst Henry Huang now expects Marvell to keep contributing to Trainium 3 and to strengthen its position on the following generation, projecting roughly $1 billion in Amazon-related Trainium revenue this year and $2 billion next year. Huang also projects three Marvell chip lines tied to Google could each bring in around $3 billion by 2028.

GF Securities named Marvell a top pick, and Wells Fargo, Morgan Stanley, Susquehanna, and Rosenblatt Securities all raised their price targets within a day of each other, Yahoo Finance reported. Separately, 24/7 Wall St.'s own model puts a $288.12 price target on the stock with a buy rating. According to ts2.tech, the broader Wall Street tally stood at 24 of 29 analysts rating the stock a buy and five at hold, with a consensus target of $276.38 and forecasts ranging from $180 to $400.

The Market's Actual Reaction Was Messier Than the Headline Number

Marvell shares jumped as much as 11% intraday on the disclosure before settling into gains reported variously as 5.79% to about 8% depending on the source and the exact session measured, according to rollingout, Tikr, and ts2.tech. ts2.tech pegged Marvell's market-cap gain that Thursday at roughly $12.0 billion, a coincidence it flagged as symmetry with the warrant's headline figure rather than proof of its real economic impact. The warrant is not a $12.18 billion cash payment and only pays out if Google's orders materialize.

Coverage of Broadcom's reaction diverged. Rollingout reported Broadcom shares slipping more than 2% as traders weighed a more diversified Google supply chain. Ts2.tech reported Broadcom gained 0.43% that same day, describing it as a "measured reaction" consistent with Google adding a supplier rather than replacing one. Both can be describing different sessions in a fast-moving week, but the two accounts do not match, and neither source reconciles the discrepancy.

The Case for Skepticism

A reasonable skeptic would point out that Marvell reported a beat-and-raise fiscal second quarter on August 27, and the stock still fell about 3% that day, according to Tikr. The stock is up nearly 190% this year and trades at roughly 43 times forward EV/EBITDA and 53 times forward earnings, Tikr reported, versus roughly 15 times for Nvidia, 18 times for Broadcom, and 36 times for AMD on the same basis. Ts2.tech separately put Marvell near 86 times trailing earnings.

That valuation gap matters because the $12.2 billion warrant figure is a ceiling, not a guarantee. Google's purchases are optional, ts2.tech noted, and full vesting depends on $120 billion in orders showing up over the next seven fiscal years. Full exercise would also dilute existing shareholders by roughly 6.7%, per ts2.tech's estimate. Yahoo Finance's own market data showed Marvell shares down about 10% in recent trading even after the analyst upgrades, a reminder that the bullish notes have not translated into a straight line up for the stock.

What Happens Next

The real test is not the announcement but whether Google's actual custom-chip orders hit the $500 million thresholds needed to unlock each of the 240 tranches. Marvell will report that progress, or the lack of it, in its quarterly results through fiscal 2033, and investors will be watching whether the warrant's paper value becomes real dilution or stays theoretical.