Marvell Technology (MRVL) shares have been on fire this year as semiconductor stocks rallied on booming demand.
The stock is up roughly 195% year-to-date, helped by strong demand for AI chips, networking and data-center infrastructure. This week, Marvell jumped more than 10% after expanding its custom silicon partnership with Alphabet’s Google.
The agreement could significantly increase Marvell’s role in Google’s AI infrastructure and comes just days before the chipmaker reports earnings on Aug. 27. Wall Street is already rethinking its expectations for Marvell ahead of the report.
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Google expands its Marvell AI chip deal
Under the recent expanded agreement, Google can buy up to 58.97 million Marvell shares at $206.58 apiece, representing as much as $12.2 billion in stock.
The agreement covers a broad range of custom silicon products, including AI inference accelerators, storage controllers, network interface controllers, memory interfaces and near-memory compute products.
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Marvell said those products will “attach to the [tensor processing unit] ecosystem,” CNBC reported.
Google has previously relied heavily on Broadcom (AVGO) to help develop its custom AI chips, including its Tensor Processing Units. The two companies expanded their chip relationship earlier this year, but Google has also been adding suppliers as it pours more money into AI infrastructure.
Marvell’s relationship with Google had already caught Wall Street’s attention. Shares jumped in April after reports that Marvell was working with Google on new chips for AI inference workloads.
Citi raises Marvell stock price target before earnings
Citi sees more upside ahead for Marvell stock, raising its price target to $275 while maintaining a buy rating, citing “higher earnings expectations and valuation.”
Citi believes the Google deal strengthens the outlook for Marvell’s custom compute business and could help diversify the company away from Amazon, according to a recent research note sent to TheStreet.
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“While we await further details from management next week, we view the expanded GOOGL agreement as a structurally positive datapoint for Marvell’s custom compute franchise,” Citi analysts said, adding that the deal signals that Google “intends to meaningfully ramp this program.”
But Citi doesn’t expect Marvell to replace Broadcom as Google’s core TPU supplier.
The firm believes the new opportunity is “likely an LPU (Language Processing Units) program, not a TPU program ramp in 2028.”
Citi also expects Marvell’s AI optics business to remain an important source of growth.
“We believe MRVL AI sales are being led by DSP optical business,” the analysts said.
Demand for optical connectivity has surged as hyperscalers build increasingly large AI clusters. Those systems require high-speed connections to move enormous amounts of data between accelerators and servers, creating another way for Marvell to benefit from the AI boom.
What to watch in Marvell’s next earnings
Marvell is set to report its fiscal second-quarter 2027 results on Aug. 27.
Three months ago, the company reported fiscal Q1 revenue of a record $2.42 billion, slightly above Wall Street’s forecast of about $2.40 billion to $2.41 billion. Adjusted earnings came in at 80 cents per share, in line with estimates of 79 to 80 cents.
CEO Matt Murphy said Marvell was seeing “exceptional AI-related bookings” across AI optics, Ethernet switches, and custom XPU and XPU-attach products.
Marvell guided for second-quarter revenue of about $2.7 billion, plus or minus 5%, and adjusted earnings of 93 cents per share, plus or minus 5 cents.
Citi will be watching three areas in particular: the trajectory of Marvell’s Trainium 3 and Maia XPU programs, the growth potential of its AI optics business, and updates on its XPU-attach design-win pipeline following the Google agreement.
Marvell stock closed at $251.01 on Aug. 20.
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