Marvell Technology Offers Google $12.2 Billion Stake Option in Custom AI Chip Deal
Big Tech's race to reduce dependence on Nvidia's graphics processors has created a new capex cycle for the companies building the infrastructure beneath it. Against that backdrop, Marvell Technology disclosed a broad custom chip…
Key takeaways
- Marvell Technology disclosed a custom chip agreement with Google that includes a warrant letting Google buy up to 58.97 million Marvell shares at $206.58 each, a stake worth about $12.18 billion.
- If fully exercised, the warrant would make Google the fifth-largest investor in Marvell.
- If Google meets the targets the warrant depends on, the agreement could bring Marvell roughly $120 billion in revenue through fiscal 2033.
- Marvell shares rose nearly 8% on the announcement, while Broadcom, Google's primary prior custom chip partner, fell more than 5%.
- The deal covers processors that run AI models, data storage systems, and networking technology that moves information.
Big Tech's race to reduce dependence on Nvidia's graphics processors has created a new capex cycle for the companies building the infrastructure beneath it. Against that backdrop, Marvell Technology disclosed a broad custom chip agreement with Google on Wednesday, a deal that includes a warrant allowing Google to acquire up to 58.97 million Marvell shares at $206.58 each. If fully exercised, the stake is worth approximately $12.18 billion and would make Google the fifth-largest investor in the chipmaker.
Marvell shares climbed nearly 8% on the announcement. The deal spans processors that run AI models, systems that manage data storage, and technology that moves information across networks. If Google meets the targets the warrant option depends on, the agreement could bring Marvell roughly $120 billion in revenue through fiscal 2033.
The Broadcom read-through
The sector read-through hit Broadcom harder. Shares in the company, which had been Google's primary custom chip partner, fell more than 5%. Morningstar analyst William Kerwin called it a big win for Marvell but described the arrangement as a growing pie at Google for new chip sources rather than a competitive displacement of Broadcom. Alphabet shares were little changed.
The underlying demand story is Google's tensor processing units. Demand for custom silicon has accelerated as cloud providers seek cheaper alternatives to Nvidia's graphics processors and technology better suited to inference, the process of running trained AI models. A recent restructuring inside Google's AI division shifted authority toward executives with closer ties to Google Cloud, sharpening the company's focus on custom chip infrastructure.
Entangled capital across the sector
The deal arrives in a week when the cross-investment ties in AI are drawing attention. Days earlier, Nvidia agreed to provide a financial backstop of up to $105 billion for a data-center project OpenAI is leasing in Ohio. In October, AMD struck a similar arrangement with OpenAI: a chip supply deal worth tens of billions of dollars in annual revenue, paired with an option for OpenAI to acquire a stake of up to roughly 10% in the chipmaker.
Whether the growing web of equity options attached to commercial contracts creates friction later is the open question this deal adds weight to. The immediate terms for Marvell are plain: a warrant strike price of $206.58 per share.
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