Marvell Reels in 'White Whale' Google with $12B Chip Deal

Marvell Technology has secured a significant chip deal with Google, marking its entry into the last remaining big tech customer. The agreement will see Marvell develop custom chips for Google and grant the search giant warrants to purchase up to 58.97 million shares of Marvell stock at $206.58 each.

The deal is valued at around $12 billion and represents roughly 7% of Marvell's outstanding shares. This exposure to Google, alongside existing partnerships with AWS and Microsoft, greatly expands Marvell's long-term AI growth opportunity.

Morningstar analysts see the agreement as a significant endorsement of Marvell's custom silicon strategy and raised their price target for MRVL to $270 from $235, implying a 14% upside from the stock's last close. The analysts also noted that share dilution concerns are outweighed by the long-term opportunity.

Marvell is set to report its second-quarter results on August 27, with analysts expecting revenue to rise 35% to $2.71 billion and adjusted profit to increase nearly 40% to $0.93 per share.