August 28, 2026, (Inside AI) — Marvell Technology shares dropped 8% to $223.10 in premarket trading Friday. The decline came despite better-than-expected quarterly results, as investors questioned when revenue from a massive custom chip deal with Google would actually materialize.
The semiconductor designer secured the agreement last week, potentially worth up to $120 billion through fiscal 2033. The deal also makes Google one of Marvell's largest shareholders. Yet the timing of revenue contribution overshadowed raised forecasts for fiscal 2027 and 2028.
"Expectations were higher, mostly because of the Google deal," analysts at Morgan Stanley said, adding that its contribution was already largely reflected in the company's prior guidance.
CEO Matt Murphy said Marvell's custom revenue targets through fiscal 2028 already reflected some Google-related revenue. He added that it would contribute much more significantly in fiscal 2029.
Marvell shares have nearly tripled this year. The company has emerged as a major winner from the AI infrastructure boom as Big Tech increasingly turns to custom chips for greater cost efficiency and performance.
Google Deal Already Priced In
The market reaction reveals a deeper tension. Marvell's stock had already climbed sharply on the Google announcement, so the raised guidance failed to deliver fresh upside. Analysts wanted clarity on the deal's ramp curve, not just headline numbers.
Marvell now expects revenue to grow about 45% in fiscal 2027 to roughly $12 billion, up from a prior forecast of about $11.5 billion. It also forecast fiscal 2028 revenue of about $18 billion, up from a prior target of about $16.5 billion.
"While the quarter and near-term guides weren't overly exciting vs expectations, a combination of the GOOGL deal, prospects with Microsoft and AI connectivity upside could point to some big figures that make $20 in EPS power before the end of the decade look realistic," Melius Research analysts said in a note.
At least five brokerages raised their price targets on Marvell following the results. The median target of $275 implies a 13.8% upside from Thursday's close, according to LSEG data.
Valuation Gap With Broadcom Widens
Marvell trades at a premium compared to rival Broadcom. Its 12-month forward price-to-earnings ratio stands at 58.41 versus 32.15 for Broadcom, according to data compiled by LSEG.
That gap reflects investor confidence in Marvell's custom silicon pipeline, including potential deals with other hyperscalers. But it also leaves little room for execution missteps or delays in revenue recognition from the Google agreement.
Marvell's data-center segment drove the raised outlook. The company cited more data-center revenue as the primary reason for lifting its fiscal 2027 forecast. Custom AI chips now represent a growing share of that business, alongside networking and connectivity products.
The Google deal structure includes warrants that make the search giant a significant shareholder. That alignment reduces some customer concentration risk but also ties Marvell's fortunes more closely to Google's infrastructure spending cycles.
Investors will watch for further details on the deal's margin profile and whether Microsoft or other cloud providers follow with similar custom chip partnerships. The stock's reaction suggests the market needs more than a headline number to justify the premium valuation.
