Marvell Stock Jumps on Google AI Chip Deal Ahead of Q2 Earnings

Marvell issued Google a warrant to purchase up to 58.97 million Marvell shares at an exercise price of $206.58 per share. If all warrant shares vest and Google exercises them entirely for cash, the total exercise cost would be approximately $12.18 billion. Based on Marvell’s recent share count, Google would own roughly 6% of the company on a post-exercise basis.

The warrant does not require Google to immediately invest $12.18 billion. Vesting is tied to commercial relationships, with most of it contingent upon revenue goals between now and 2033. The structure motivates Google to increase purchases of chips from Marvell. It also possible that existing shareholders will take a dilution hit.

Q1 Revenue Reached a Record $2.42 Billion

As it stood, Marvell's AI related revenue was increasing and fiscal Q1 2027 sales hit an all-time high of $2.418 billion, or 28% year-over-year growth and slightly above management's stated guidance midpoint.

GAAP net income was $34.5 million, or $0.04 per diluted share. Non-GAAP net income was $718 million, resulting in an adjusted EPS of $0.80. Operating cash flow was another record for the company at $638.8 million.

GAAP gross margin was 52.1% compared to 58.9% in the non-GAAP segment. The discrepancy relates to stock-based compensation and other charges associated with acquisition, intangibles and amortization.

Sales from the Data Center segment made up $1.83 billion, comprising 76% of total sales in Q1. Year on year sales of segment climbed by 27% due to the upcoming production of Custom Silicons, Optical Interconnects, and Ethernet Switches.

Marvell stands to gain parts of a hyperscale-AI data center. Custom processors from Marvell help support specialized computing, while its optical and Ethernet products help shift data to accelerators, switches, and servers. Storage controllers and memory-connectivity products help ease the latency caused by insufficient memory bandwidth.

As a result, Marvell stands to gain some AI data center infrastructure investment without having to take on Nvidia's GPUs behemoth in a direct market competition.

Optical Networking Supports the Outlook

Management said they saw strong bookings for 800G and 1.6T optical products, 51.2-terabit Ethernet switches, data-center interconnect modules and custom XPU systems.

The value of these products increases with larger AI clusters. There is little value in adding accelerators if network resources are constrained or cannot operate within the power envelopes.

Marvell anticipates a significant increase in revenue for FY 2027, with most of the growth coming from the data center segment.

Acquisitions Expand Connectivity and Memory Products

Acquisition of Celestial AI for $3.5 billion closed on February 2. Celestial provides Photonic Fabric technology, which helps integrate and connect processors and memory using optical links.

The XConn acquisition closed on February 10. XConn focuses on designing and developing PCIe / CXL switching products used to help connect processors, accelerators and memory.

On August 4, Marvell announced new AI memory and storage products designed for agentic AI inference. Marvell's Photonic Fabric system designs a shared memory tier across processors and racks to alleviate GPU memory-access delays and, in turn, eliminate idle memory.

On August 27, Marvell Technologies Group will publish its fiscal Q2 2026 earnings. Marvell's management has set revenue expectations in the range of $2.7 billion ± 5%. The midpoint of this range is indicative of approximately 35% year over year growth.

Additionally, the company is expecting:

• GAAP Gross margin: 52.1% - 53.1%
• Non-GAAP Gross margin: 58.25% - 59.25%
• GAAP EPS: $0.37 ± $0.05
• Non-GAAP EPS: $0.93 ± $0.05

The following should be of interest to investors:

Particular focus will be given to management’s explanation of the Google agreement during the earnings call, the expected margins from data center growth, the expected demand for both 800G and 1.6T optical products and overall margins.

Marvell Technical Analysis: MRVL Tests $245

Currently trading around $237.10, stock has broken the descending channel that has defined trading for the last several months. Also, price has again crossed the moving average zone at 216.57 – 216.95.

Resistance will be in the range of $241.49 - $245, and a sustainable break above $245 will allow further expansion to $275 and beyond to $298.38. RSI around 60 indicates positive momentum without being overly bullish.

Marvell Price Forecast - Source: Tradingview

If stock is rejected at $245, the first support will come from the trendline. The $216 area will be the next support, with $204.42 being the third. Breaking $216 will give bearish signals to the recovery.

Google’s agreement with Marvell boosts expectations on Marvell’s potential revenue over the next several years, with a possible upside of up to $120B by 2033. However, the potential revenue from this deal is not set in stone, and warrant vesting could lead to a dilution of the equity.

The case for the growth of Marvell is furthered by the results for the first quarter of this year. Revenue grew by 28 percent, data-center revenue grew by 27 percent, and operating cash flow reached an all-time high. Now the August 27 report must show that bookings convert into revenue and that margins do not decline.

Marvell remains constructive above $216. Obviously a close above $245 would be constructive as a move toward $275 would become more likely.

This is only analysis, not an investment recommendation.