Google's Warrant to Buy Marvell Shares Hinges on $120 Billion Spending Target

Marvell Technology, a leading chipmaker, recently announced an expanded custom chip partnership with Google. The deal includes a warrant giving Google the right to buy 58,970,907 Marvell shares at an exercise price of $206.58 per share.

The warrant comes with a vesting schedule that requires Google to recognize revenue from the custom products covered by the agreement. For every $500 million in revenue, one installment of shares vests, and there are 240 installments in total. This means full vesting would require Google to spend a total of $120 billion on Marvell's custom chips over about six and a half years.

The partnership is structured around the possibility of enormous spending, but it's essential to note that the $120 billion is the ceiling on an ambition, not a forecast. The vesting schedule runs only as fast as Google decides to buy, giving the company flexibility in its purchasing decisions.