Shares of Indian chip designer Marvell Technology fell sharply after the company’s latest earnings report, as the market questioned when its major Google AI custom chip contract will start driving significant revenue.
- Marvell shares dropped over 8% despite solid quarterly results.
- Revenue expected to grow 45% in fiscal 2027 and hit $18B in 2028.
- Google AI chip deal’s major impact anticipated only from fiscal 2029.
What happened
Marvell Technology’s shares slid more than 8% in early trading following the release of its quarterly results. The company posted strong revenue growth forecasts for fiscal years 2027 and 2028, fueled by increased data center demand and sustained AI spending. However, investors were looking beyond these figures for clearer signals about the contribution from Marvell’s recently announced Google custom chip deal.
This Google agreement, which could generate up to $120 billion in revenue through 2033, has been a key factor in boosting Marvell’s valuation this year, with shares nearly tripling. Despite this, CEO Matt Murphy clarified that although some Google-related revenue is factored into forecasts through 2028, a significant impact is only expected starting in fiscal 2029.
Why it matters
Marvell has become a favorite in the market due to the AI spending boom by Big Tech companies, who are aggressively investing in custom chips to improve cost efficiency and performance. With global AI expenditure expected to exceed $740 billion in 2026, investors anticipate strong growth from companies tied to this trend, which has increased pressure on Marvell to deliver clear revenue acceleration.
The stock selloff highlights investor sensitivity to the timing and certainty of revenue streams from large strategic deals. The lack of immediate clarity on the Google deal’s payoff has raised doubts despite upward revisions in price targets by several brokerages, reflecting broader market expectations for near-term results in growth stocks.
What to watch next
Market participants will closely monitor updates from Marvell regarding the pace at which the Google custom chip project ramps up production and begins contributing meaningfully to revenue. The company expects strong revenue growth of around 45% in fiscal 2027 and $18 billion in 2028, but the next few quarters will be crucial for validating these forecasts amid heightened expectations.
Additionally, developments from other AI-related partnerships, including potential deals with companies like Microsoft, will be important. Analysts suggest that if Marvell can demonstrate robust earnings per share growth stemming from these AI opportunities, including AI connectivity, it could support targets of $20 EPS powering the stock higher by the decade’s end.