Key facts
- Marvell Technology shares fell 8% due to concerns over the timing of revenue from a Google deal.
- The company secured a custom-chip deal with Alphabet's Google that could generate up to $120 billion in revenue through fiscal 2033.
- Marvell forecasts fiscal year 2027 revenue of approximately $12 billion, an increase from its previous forecast of $11.5 billion.
- Marvell projects fiscal 2028 revenue of about $18 billion, up from its prior target of $16.5 billion.
- Marvell's CEO stated that custom revenue targets through fiscal 2028 already included some Google-related revenue, with a more significant contribution expected in fiscal 2029.
Marvell Technology's shares declined 8% in premarket trading as investor focus shifted to the timing of revenue from a significant custom-chip deal with Alphabet's Google, overshadowing the semiconductor designer's better-than-expected financial results. The deal, which could generate up to $120 billion through fiscal 2033, also positions Google as one of Marvell's largest shareholders. However, analysts from Morgan Stanley noted that expectations were higher and that the deal's contribution was largely factored into prior guidance, with more substantial revenue expected from fiscal year 2029 onwards. CEO Matt Murphy confirmed that current revenue targets already incorporated some Google-related income. Despite the share price drop, Marvell has seen its value nearly triple this year, benefiting from the AI infrastructure boom. Analysts from Melius Research suggested that the Google deal, along with prospects with Microsoft and AI connectivity, could make $20 in earnings per share power before the end of the decade a realistic target. Following the results, at least five brokerages raised their price targets on Marvell, with a median target of $275 implying potential upside.