Marvell Technology Inc. (MRVL) just gave investors a reason to smile. The chipmaker announced an expanded, long-term partnership with Alphabet Inc.'s (GOOGL) Google to develop custom silicon that supports Google's Tensor Processing Unit (TPU) ecosystem. And according to JPMorgan, this could be a very big deal.
Analyst Harlan Sur reiterated an Overweight rating on Marvell, saying the agreement could support upside to Wall Street's revenue and earnings estimates as Google's custom AI infrastructure expands.
Marvell's Google Deal Could Unlock $120 Billion Opportunity
On Thursday, Marvell revealed it will work with Google on custom chips that include an AI inference offload engine, storage controllers, networking chips, and memory interface controllers. But here's the nuance: this isn't about Google's core TPU accelerator. Marvell's chips will sit alongside and support the TPU, not replace it.
That distinction didn't dampen JPMorgan's enthusiasm. The bank crunched the numbers and came up with a jaw-dropping figure. Under the agreement, Google received warrants to purchase about 59 million Marvell shares. About 57.6 million shares will vest based on Google's purchases of Marvell custom products through fiscal 2033. One of 240 equal warrant tranches will vest for every $500 million in associated revenue. JPMorgan calculates that full vesting would imply about $120 billion in cumulative revenue, or roughly $19.2 billion annually over about 6.25 years.
To put that in perspective, Wall Street is currently modeling about $11.5 billion for fiscal 2027 and $16.8 billion for fiscal 2028. So the potential annual revenue from this deal alone could blow past those estimates.
JPMorgan Sees Earnings Upside For Marvell
JPMorgan cautions that the warrant structure doesn't guarantee those sales. But the firm believes a significant portion of the opportunity could be incremental to current expectations. Sur's model shows a path toward about $11 per share in calendar 2028 earnings, compared with the current Wall Street estimate of $9.52.
The analyst also sees this partnership as validation of a broader shift among hyperscalers toward custom silicon beyond core AI accelerators. That expansion could increase demand for chips used in networking, storage, memory interfaces, and near-memory computing.
Investors seemed to like the news. Marvell shares were up 1.96% at $241.91 at the time of publication on Thursday.
