Marvell Technology's share price jumped about 10% after disclosing a custom chip partnership with Google that includes a warrant worth about $12.2 billion.
However, the warrant vests only as Google purchases chips—one installment for every $500 million in revenue, up to a potential total of $120 billion over roughly six and a half years.
Google has made no binding commitment to reach that figure and can reduce purchases at will, meaning the full value of the warrant hinges entirely on Google's discretionary spending decisions.
What happened
Marvell Technology disclosed an expanded custom chip partnership with Google that includes a warrant giving Google the right to buy 58,970,907 Marvell shares—about $12.2 billion worth at the warrant's exercise price of $206.58 per share. The warrant vests in 240 installments, with one installment unlocking for every $500 million of revenue Marvell recognizes from Google's purchases of custom semiconductor products covered by the agreement.
Why it matters
Full vesting requires $120 billion in Google purchases over the measuring period (Aug. 1, 2026 through Jan. 29, 2033)—an average of roughly $18.5 billion a year, more than double what all of Marvell's customers combined delivered over the past four reported quarters. However, Google has made no disclosed commitment to buy any particular amount; the filing describes the purchases as discretionary and notes Google can slow qualifying purchases whenever it likes. The structure suggests the companies envision potentially enormous spending, but the $120 billion is a ceiling on ambition rather than a forecast.
What to watch
Marvell's data center end market—where this custom chip work sits—generated $1.8 billion of revenue in the fiscal first quarter of 2027 (ended May 2, 2026), up 27% year over year and representing 76% of total sales. Management is guiding for about $2.7 billion in the fiscal second quarter, up 35% at the midpoint, with CEO Matt Murphy expecting growth to accelerate each quarter through the fiscal year. The warrant vests only as Google decides to buy, making the pace of Google's actual spending the key determinant of Marvell shareholder value.
Ask the AI about this article →
The warrant structure is remarkable precisely because it quantifies the scope of Google's potential appetite for Marvell's custom chips. At $500 million per vesting installment across 240 installments, the $120 billion total over six and a half years reflects the companies' design of the agreement around the possibility of massive spending—not a binding forecast, but an ambition ceiling. For context, Marvell's entire data center business, which includes this custom chip work, produced only $1.8 billion in revenue in the fiscal first quarter of 2027. If Google were to reach even half of $120 billion in cumulative purchases, it would dwarf Marvell's current total customer base. The momentum is real: data center revenue is accelerating (27% year-over-year growth in the latest quarter), and management expects that acceleration to continue. But the warrant's discretionary vesting—tied to Google's purchasing decisions rather than any binding obligation—means the full $12.2 billion value of the shares depends on Google's willingness to commit sustained, enormous levels of spending on Marvell chips. Full vesting and exercise would dilute Marvell shareholders by about 7%.
AI-summarized, only the topics you pick — one digest a day via Email, Slack, or Discord.
Free · takes 30 seconds · unsubscribe anytime
Ask AI anything about this article. Q&As are published on this page for other readers too.
Astromech, an AI startup co-founded by Ben Lamm and geneticist George Church, raised $20 million in funding le…
Alibaba is guiding its AI cloud revenue toward a US$10 billion run-rate in the next quarter, signaling that it…
Ode, a venture arm of Anthropic, has acquired Casper Studios to expand its enterprise artificial intelligence…
SK hynix, the world's largest supplier of high-bandwidth memory (HBM), has published a technical roadmap for c…
Alibaba Group's June quarter results show cloud AI revenue growing 45%, while capital expenditure (investment…
Anthropic launched Claude Academy on August 20, a free learning site that explains AI fundamentals and how to…
