Marvell Lands ‘White Whale’ Google, Raises Stakes Ahead Of Q2 Report: Analyst Says TPU Deal ‘Greatly Expands’ MRVL’s Long-Term AI Opportunity

Morningstar said the long-term opportunity far outweighs share-dilution concerns.

• Marvell stock rose 10% on Wednesday after it announced a chip manufacturing deal with Google.
• Google received a warrant to purchase up to 58.97 million Marvell shares at $206.58 each, representing roughly 7% of the company.
• Marvell is due to report Q2 results on Aug. 27.

Marvell Technology has secured a chip deal with the last remaining Big Tech customer, giving it significant exposure to the AI industry and a long-term growth opportunity, analysts said following its TPU manufacturing and warrants deal with Google.

Marvell on Wednesday announced that it would develop custom chips for the search giant, along with warrants giving Google the option to buy more than $12 billion worth of Marvell stock. MRVL rose 10% and extended gains in the overnight session, while shares of Google’s other chip vendor Broadcom dropped 4.6%.

MRVL Analysts See Long-Term Strength

“This is another endorsement of Marvell's custom silicon strategy as it lands a brand new blue-chip customer. This should greatly expand Marvell's long-term AI growth opportunity alongside its existing programs at AWS and Microsoft," Morningstar analysts said in a new note titled “Marvell: With Google Chip Deal, Firm Landing the White Whale.”

"Marvell's custom silicon, or XPU, designs are clearly gaining traction, but we see the firm offering a broader data center portfolio as well… We aren't concerned with share dilution, given a $120 billion revenue opportunity. We see any amount of execution to this agreement as earnings-accretive,” they said. Marvell's customer roster includes Nvidia, AWS and Microsoft. 

Morningstar raised its price target of MRVL to $270 from $235, implying a 14% upside from the stock’s last close. 

Marvell makes data-center and networking semiconductors and is best known for custom AI ASICs (Application-Specific Integrated Circuit), Ethernet switches, optical interconnects, and storage controllers that power AI servers and cloud infrastructure.

The Google deal could bring about $120 billion in cumulative revenue through 2033, and Marvell is further entrenching itself as a key turnkey partner for the AI infrastructure buildout, Stifel said in its investor note.

B. Riley wrote that Marvell is materially strengthening its AI positioning and extending long-term growth visibility through potentially significant Custom Products revenue.

MRVL: Retail View, Earnings Watch

On Stocktwits, the retail sentiment for MRVL shifted to ‘extremely bullish’ from ‘bullish', while the 24-hour message volume for the ticker rose over 140%. “Bunch of major upgrades tomorrow will send it to 260 eow. Post ER will be beyond my imagination,” said a trader.

Marvell will report second-quarter results on Aug. 27. Analysts expect revenue to rise 35% to $2.71 billion and adjusted profit to increase nearly 40% to $0.93 per share.

Year to date, Marvell shares have risen 180%.

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