Marvell shares slide 8% as timing concerns over $120 billion Google AI deal eclipse strong earnings

Marvell Technology Shares Drop Despite Strong Earnings Beat

Marvell Technology shares fell 8% to $221.6 in early trading, erasing over $17.4 billion in market value3

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. The decline came despite the chip designer posting revenue of $2.74 billion and adjusted earnings of 94 cents per share, narrowly topping analyst consensus estimates of $2.71 billion and 93 cents2

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. Marvell's third-quarter revenue forecast midpoint of $3.15 billion also slightly beat expectations2

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. The selloff led several AI-related stocks lower, with Nvidia, Intel, Advanced Micro Devices, Micron, and Sandisk each slipping less than 1%2

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Investor Concerns Over Timing of Google AI Deal Revenue Dominate

Investor concerns over timing of Google AI deal revenue overshadowed Marvell's raised fiscal year forecasts. The custom AI chip deal with Google, announced last week, could generate up to $120 billion in revenue through fiscal 2033 and make Alphabet one of Marvell's largest shareholders1

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. However, investors sought clarity on when this revenue would materialize. Morgan Stanley analysts noted that expectations were higher, mostly because of the Google AI deal, adding that its contribution was already largely reflected in the company's prior guidance1

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. Jefferies analysts called it "somewhat disappointing" that there wasn't more upside from the deal with Google in Marvell's projections for this year2

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Matt Murphy Clarifies Google Deal Timeline and Scope

CEO Matt Murphy addressed investor concerns during the earnings call, explaining that Marvell's custom revenue targets through fiscal year 2028 already reflected some Google-related revenue, but the deal would contribute much more significantly in fiscal year 20291

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. Murphy pushed back on viewing the agreement as a single custom silicon win, describing it as spanning inference accelerators, networking interface cards (NICs), storage controllers, memory interface controllers, near-memory compute, and the company's XPU attach portfolio5

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. "If you took the full performance and the full opportunity, then you're right. It's just a monster number," Murphy stated, suggesting Wall Street's existing models may already be too low5

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Raised Revenue Forecast Points to Data Center Strength

Marvell raised its fiscal year 2027 revenue forecast to approximately $12 billion, up from a prior forecast of about $11.5 billion, representing about 45% growth1

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. The company also raised its fiscal 2028 revenue forecast to about $18 billion, up from a prior target of about $16.5 billion1

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. Needham analysts noted management guided fiscal year 2028 revenue growth to more than 50% year-over-year, up from a prior outlook of 45%4

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. Data center revenue is now expected to grow more than 60% year-over-year in fiscal year 20284

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. Rosenblatt analysts attributed the increase to scale-out interconnect, switching, and a custom silicon ramp in the second half of fiscal year 20274

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AI Infrastructure Boom Positions Marvell as Major Winner

Marvell has emerged as a major winner from the AI infrastructure boom as Big Tech increasingly turns to custom chips for greater cost efficiency and performance1

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. The AI spending boom has fueled Marvell to become a market darling, with shares nearly tripling this year1

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. CEO Matt Murphy said Marvell's AI demand remains "exceptionally robust"2

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. With Big Tech's AI spending set to top $740 billion this year, investors had come to expect increasingly stronger results from companies tied to the boom3

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. Even with Friday's decline, Marvell is still one of the best performing stocks in the S&P 500 this year, with shares up over 160% in 20262

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Analyst Price Targets Remain Bullish Despite Selloff

At least eight brokerages raised their price targets on Marvell following the earnings report, with the median target of $275 implying a 13.8% upside from Thursday's close3

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. Rosenblatt analysts reiterated a Buy rating and $300 price forecast, based on 28 times their fiscal 2029 earnings-per-share framework4

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. Needham raised its price forecast to $300 from $270, maintaining a Buy rating, based on approximately 30 times their calendar 2028 non-GAAP EPS estimate of $10.254

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. Melius Research analysts noted that "a combination of the GOOGL deal, prospects with Microsoft and AI connectivity upside could point to some big figures that make $20 in EPS power before the end of the decade look realistic"1

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. Marvell trades at a premium compared to rival Broadcom, with a 12-month forward price-to-earnings ratio of 58.41 versus 32.151

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What Investors Should Watch at Upcoming Analyst Day

Rosenblatt analysts pointed to Marvell's Analyst Day in early October, when management is expected to provide additional detail on long-term revenue and margin targets4

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. Murphy indicated the company plans to present a more detailed roadmap extending through the end of the decade5

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. The more important signal is that Marvell is framing the deal as evidence that its position in AI infrastructure has expanded beyond what current consensus models reflect5

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. Citi analysts highlighted comments from Marvell executives that the company expects a "significant acceleration" in its custom chip business in the back half of this fiscal year2

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. Murphy repeatedly suggested analysts may still be underestimating the opportunity, stating that "custom numbers definitely go higher" and that Marvell's custom AI business would become "a lot larger than anybody's been modeling so far"5

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