Marvell Beat and Raised Guidance. Why Its Google Deal Still Spooked Investors

Marvell Technology Inc. (MRVL) experienced a significant drop in its stock price after reporting a beat-and-raise on August 28. Despite a 37% revenue increase to $2.7 billion and an expanded Google partnership with Alphabet Inc. (GOOGL), the company's shares fell more than 8%. Oppenheimer raised its price target to $325 from $300 while maintaining an Outperform rating, highlighting why the selloff was unjustified.

The revenue growth was primarily driven by interconnect products and custom chip programs, with Marvell's Trainium and Maia programs on track for $700 million in revenue next year. The newly expanded Google partnership, which could result in cumulative Google purchases of roughly $120 billion over seven years, was the primary reason for the selloff.

While investors expected substantial long-term revenue and EPS from the deal, the delayed financial impact and the warrant vesting ceiling rather than a confirmed figure raised concerns. Despite strong AI-related demand across Marvell's data center portfolio, the timing of the potential $120 billion figure is causing investor worry.

The company now anticipates $12 billion in revenue for calendar year 2026 and $18 billion for calendar year 2027, up from previous outlooks. Hedge fund interest in Marvell remains high, with 96 hedge fund holders holding the stock at the end of Q2. The stock also has a significant short interest, representing around 3 to 4% of its float.

Marvell's quarter demonstrates that an objectively strong quarter is not enough to win over investors anymore, and extraordinary execution will be necessary to reset expectations.