Marvell raises annual forecasts, but shares fall as Google deal questions linger

On August 27, Marvell Technology raised its annual forecasts, but its shares fell as concerns lingered over a Google deal. Despite signing a significant AI chip agreement with Google, the chipmaker did not provide a major increase to its long-term revenue outlook, disappointing investors expecting a growth boost. Marvell's shares declined over 6% after hours on Thursday, overshadowed by questions about when the Google deal would generate revenue. The company's stock has nearly tripled so far this year due to optimism driven by AI.

Marvell struck a custom chip deal with Alphabet's Google, potentially bringing in $120 billion in revenue through fiscal 2033 and making Google one of its largest investors with a potential $12.2 billion stake. However, CEO Matt Murphy clarified during a post-earnings call that the company's revenue targets through fiscal 2028 already factored in some of this Google-related revenue, with more substantial contributions expected in fiscal 2029. He did not announce a new target, instead deferring to its investor day on October 6.

Analysts noted that high expectations for Marvell's custom AI accelerator projects have outpaced reality, making it difficult for other companies to meet forecasts. Big Tech's push to develop in-house, cheaper chips like Marvell's custom silicon business, driven by the data-center buildout, has seen a surge in demand. The company now expects revenue growth of about 45% in fiscal 2027, reaching around $12 billion, up from its previous forecast of $11.5 billion, due to increased data-center revenue.

Second-quarter revenue rose 37% to $2.74 billion, beating estimates of $2.71 billion, and adjusted profit came in at 94 cents per share, compared to estimates of 92 cents.