Marvell surges 12% as Google warrant ties to custom chip revenue

Marvell Technology jumped 12 percent in pre-market trading after disclosing a binding agreement with Google to develop custom semiconductor products, deepening the chipmaker's reach into the hyperscaler AI silicon market.

The agreement, entered into on July 29, was disclosed in a regulatory filing. Marvell issued Google a warrant on Aug. 18 to purchase up to 58.97 million shares at $206.58 per share, with the bulk of the warrant vesting as Google generates revenue from Marvell's custom silicon. The more chips Google buys and deploys, the more shares it can purchase at the locked-in price.

The Google warrant dwarfs a similar arrangement Marvell struck with Amazon Web Services in December 2024, which covered 4.18 million shares at an exercise price of $87.77, with roughly 3.9 million of those shares vesting based on revenue through January 2030. The new warrant is more than 14 times larger in share count. Reports indicate Google is in advanced discussions with Marvell to co-develop two new AI chips: a memory processing unit designed to work alongside Google's existing Tensor Processing Units, and a specialized TPU built specifically for inference tasks.

Marvell now holds warrant-based partnerships with two of the three largest cloud infrastructure providers and also supplies custom ASICs to Microsoft, making it one of the few semiconductor companies with deep relationships across all three hyperscale giants. The deepening Google relationship could shift custom AI chip share away from Broadcom, which saw its shares decline when the partnership discussions were first reported in April.

Warrant mechanics tie Google's stake to chip revenue

The warrant structure creates a direct financial link between Google's adoption of Marvell silicon and Google's equity stake in the company. Google gets the right to buy Marvell stock at $206.58 regardless of where the market price sits at the time, but only as its custom chip deployments generate revenue for Marvell.

This breadth matters as cloud providers increasingly design their own chips to reduce dependence on Nvidia's GPUs, which dominate the AI accelerator market. Marvell's stock rose approximately 6 percent in mid-April when the partnership discussions were first reported, while Broadcom shares declined on the news.

Custom silicon competition heats up against Broadcom, Nvidia

The deal intensifies competition in the custom AI chip market, where Broadcom has been the dominant merchant supplier of custom ASICs to hyperscalers. Google's decision to deepen its Marvell relationship suggests the search giant is diversifying its custom silicon supply chain. For Nvidia, the broader trend of hyperscalers building in-house chips represents a long-term structural challenge to its data center GPU dominance, though Nvidia's CUDA software platform remains a significant moat.

One detail worth watching: no 8-K or public SEC filing has yet surfaced matching the exact figures of this warrant agreement. Investors should monitor Marvell's regulatory filings for formal documentation, which would contain the full vesting schedule and any performance milestones tied to the warrant.

Marvell shares, which had been trading near $206 before the announcement, now face a market pricing in meaningful upside from the Google relationship. The company's ability to convert the warrant into sustained revenue growth will determine whether the 12 percent pre-market surge holds. Broadcom, which competes directly with Marvell for custom ASIC design wins, remains the key rival to watch as hyperscaler chip procurement decisions unfold through 2027.

This article is for informational purposes only and does not constitute investment advice.