- Marvell shares jumped 10.94% to $239.62 after a deal with Google was announced
- Google received a warrant to buy up to 58.97 million Marvell shares at $206.58 each
- The warrant is conditional on Google meeting purchase targets through fiscal year 2033
Marvell Technology shares surged 10.94% to $239.62 in early trading on Wednesday, after the chipmaker announced a major agreement with Google to develop custom artificial intelligence chips. The stock touched an intraday high of $245.49, compared with Tuesday's close of $216.
Under the agreement, Alphabet's Google has received a warrant to purchase up to 58.97 million Marvell shares at $206.58 apiece. If fully exercised, the stake would be worth about $12.18 billion, potentially making Google Marvell's fifth-largest investor.
The warrant is not an immediate equity investment. Most of it will become available only if Google meets specified purchasing targets through fiscal 2033. This links the potential stake to the volume of custom products Google buys from Marvell.
The partnership will cover a broad range of technologies supporting Google's Tensor Processing Unit (TPU) ecosystem, which forms a key part of its AI infrastructure. Marvell will work on AI inference accelerators, storage and networking components, memory interface controllers and near-memory computing technologies.
The deal highlights the growing demand for custom AI chips as technology companies seek alternatives to Nvidia's costly graphics processors. Custom silicon can also be designed for specific workloads, including AI inference.
The development puts Marvell in stronger competition with Broadcom, which has been Google's main custom-chip partner. Broadcom signed a long-term agreement with Google in April to develop and supply future generations of custom AI chips and components through 2031.
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The market reaction reflected the importance of the deal. Marvell shares rose sharply in premarket trading, while Broadcom shares fell more than 3%, according to Reuters.
The rally adds to Marvell's strong recent performance. The stock has gained 200.28% over the past six months, rising from $79.61 on February 19 to $239.05 in the latest six-month market view. The latest Google deal therefore gives investors another major AI-driven growth catalyst as demand for custom silicon accelerates.
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