Key Takeaways
- MRVL shares declined more than 6% in extended trading following Thursday’s Q2 earnings release
- The company reported adjusted earnings per share of 94 cents versus the 93-cent consensus; sales of $2.74 billion topped the $2.72 billion projection
- As part of a custom AI chip partnership potentially worth $120 billion through fiscal 2033, Google obtained a warrant for a $12.2 billion position in Marvell
- The company boosted fiscal 2027 sales outlook to approximately $12 billion and fiscal 2028 to roughly $18 billion
- Market participants expressed concern that the Google partnership won’t generate meaningful revenue until fiscal 2029
Shares of Marvell Technology had climbed 184% in 2026 leading up to Thursday’s quarterly report. However, the stock surrendered over 6% during after-hours sessions following the announcement.
Marvell Technology, Inc., MRVL
The financial performance was actually quite strong. The semiconductor company delivered adjusted earnings of 94 cents per share for its fiscal second quarter, surpassing analyst predictions of 93 cents. Sales jumped 37% from the prior-year period to reach $2.74 billion, exceeding the Street’s forecast of $2.72 billion.
What explains the selloff? Investor expectations had reached elevated levels.
The chipmaker has emerged as one of the standout performers in the AI boom throughout this year. Such impressive gains create heightened demands for exceptional results, not merely incremental wins.
The partnership with Google was anticipated to serve as a major driver. Last week, news emerged that Alphabet’s Google secured a warrant enabling it to acquire up to a $12.2 billion ownership position in Marvell, linked to a custom AI chip collaboration potentially generating $120 billion in revenue through fiscal 2033.
The figure is substantial. However, the timeline became the sticking point.
Google Partnership Revenue Delayed Until 2029
During the earnings call, CEO Matt Murphy clarified that the Google collaboration won’t generate substantial revenue until fiscal 2029. This disappointed some analysts who had anticipated more immediate financial impact.
Murphy addressed the concern, explaining that Marvell’s custom chip revenue projections through fiscal 2028 already incorporate some Google contributions. He suggested there’s “upside bias” to the company’s previous $10 billion-plus fiscal 2029 projection, though he stopped short of providing updated figures.
Additional information will be disclosed at Marvell’s investor day scheduled for October 6.
Murphy indicated that custom-chip sales would experience more than 100% growth in the coming year. The Google agreement encompasses AI processors, storage solutions, networking equipment, and memory components linked to Google’s AI tensor processing units.
For the third quarter, Marvell projected adjusted earnings per share between $1.05 and $1.15, with sales around $3.15 billion at the midpoint. Wall Street had forecast EPS of $1.08 and revenue of $3.04 billion, making the guidance better than anticipated.
Multi-Year Revenue Outlook Receives Boost
Looking at the extended timeline, Marvell now anticipates fiscal 2027 sales of approximately $12 billion, raised from its previous estimate of $11.5 billion. The fiscal 2028 outlook was elevated to $18 billion from $16.5 billion.
Both represent significant increases. Yet investors were looking for stronger near-term momentum.
Bob O’Donnell, chief analyst at TECHnalysis Research, highlighted the broader market dynamics. “I believe expectations around custom AI accelerator projects are riding very high, especially given the recent news about the Broadcom and OpenAI work on Jalapeno,” he said.
The competitive landscape remains fierce. Major technology companies are rushing to create proprietary chips as alternatives to Nvidia’s premium-priced processors, positioning Marvell as a key beneficiary of this shift.
The company’s investor day on October 6 has emerged as the next critical milestone for market watchers.
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