Marvell Stock Price Dropped After Google Deal, But It May Be a Buying Opportunity

Marvell Technology's stock price took a hit after announcing its largest customer agreement yet with Google, but investors should not be alarmed. The contract, which could potentially generate up to $120 billion in custom revenue for Marvell through fiscal 2033, is actually a strong buy signal.

The agreement ties equity to Marvell silicon purchases and has already led to an expansion of the company's data center business, with 79% of total revenue now coming from this segment. The Google warrant only converts if Marvell delivers, aligning Google's equity upside with Marvell's revenue upside.

CEO Matt Murphy told analysts that they should assume custom numbers will 'definitely go higher' beyond what has been modeled previously, describing the full opportunity as 'a monster number.'