Strong partnership with Google to create a full range of customized chips, Wall Street cheers Marvell Tech for "significant benefits"

According to the Zhitong Finance APP, after Marvell Technology (MRVL.US) announced an expansion of its semiconductor collaboration with Google (GOOGL.US), Wall Street analysts generally believe this is a "significant positive factor" for Marvell Technology under the leadership of Matt Murphy. Following the disclosure of this news, Marvell Technology's stock price surged on Wednesday.

Under the expanded cooperation framework, Marvell Technology will work with Google to jointly develop a "full range of custom chip projects covering the TPU ecosystem," specifically including products such as AI inference accelerators, storage controllers, network interface controllers, memory interface controllers, and near-memory computing.

In recent years, as companies seek alternatives to Nvidia's expensive graphics processing units (GPUs), the demand for custom chips like Google's tensor processing units (TPUs) for AI workloads has surged significantly.

RBC Capital Markets analyst Srini Pajjuri noted in a report to clients: "We believe Marvell Technology has previously collaborated with Google on XPU solutions, covering products such as CXL and NIC." He further stated that although there had been unconfirmed rumors about the "Frozen v2" project, the disclosure in the 8-K filing marks Google's first official confirmation that Marvell Technology is developing AI accelerators for it, validating Marvell Technology's expanding role in the custom chip space for hyperscale customers—previously, the company had similar collaborations with Amazon (AMZN.US) and Microsoft (MSFT.US).

Looking deeper, Pajjuri expects that Google will obtain approximately $80 billion to $90 billion worth of tensor processing unit (TPU) supplies from Broadcom (AVGO.US) and MediaTek next year. It remains unclear whether Marvell Technology will capture a portion of that share or if the overall market has expanded, but it is certain that this collaboration constitutes a long-term "significant benefit" for Marvell Technology. Pajjuri has given Marvell Technology an "outperform" rating.

Wells Fargo analyst Aaron Rakers is also optimistic about this collaboration, calling it a "noteworthy incremental benefit" for Marvell Technology. Rakers maintains an "outperform" rating and sets a target price of $240 per share.

As part of the deal, Marvell Technology granted Google a warrant on August 18, allowing it to purchase up to 58.97 million shares of the company at an exercise price of $206.58 per share. The company signed a commercial agreement with Google on July 29 to provide custom chip products. In the first year following the signing of the agreement, 1,360,867 warrants will vest quarterly. The remaining shares will vest based on "self-purchases" from Marvell Technology during the period from the third quarter of fiscal year 2027 to the end of fiscal year 2033, with a batch of shares vesting each time the jointly developed products generate $500 million in revenue