Key Takeaways
- MRVL shares declined more than 6% in extended trading following Thursday’s Q2 earnings release
- The company reported adjusted EPS of 94 cents versus the 93-cent consensus; revenue reached $2.74 billion against expectations of $2.72 billion
- As part of a custom AI chip partnership potentially worth $120 billion through fiscal 2033, Google obtained a warrant for up to a $12.2 billion stake in Marvell
- The chipmaker boosted fiscal 2027 revenue projections to approximately $12 billion and fiscal 2028 to roughly $18 billion
- Market participants expressed concern that meaningful revenue from the Google partnership won’t materialize until fiscal 2029
Shares of Marvell Technology had climbed an impressive 184% in 2026 heading into Thursday’s earnings announcement. However, the stock surrendered over 6% during after-hours trading following the results.
Marvell Technology, Inc., MRVL
The financial performance was impressive by most standards. The semiconductor company delivered adjusted earnings per share of 94 cents for its fiscal second quarter, exceeding analyst projections of 93 cents. Revenue jumped 37% compared to the same period last year, reaching $2.74 billion and surpassing the Street’s forecast of $2.72 billion.
What explains the selloff? Market expectations had become overheated.
The company has emerged as one of this year’s top performers in the artificial intelligence sector. Such a dramatic rally creates heightened expectations for exceptional results, not merely incremental beats.
The partnership with Google was anticipated to serve as a major growth driver. The previous week, Alphabet’s Google secured a warrant allowing it to acquire up to $12.2 billion worth of Marvell shares as part of a custom AI chip collaboration that could yield up to $120 billion in revenue through fiscal 2033.
While the dollar figure is substantial, the revenue timeline proved problematic.
Google Partnership Revenue Timeline Extended to 2029
During the earnings conference call, CEO Matt Murphy clarified that the Google collaboration won’t generate material revenue contributions until fiscal 2029. Some market analysts had anticipated a more immediate financial impact.
Murphy addressed investor concerns by explaining that Marvell’s custom revenue projections through fiscal 2028 already incorporate some Google revenue. He suggested there’s an “upside bias” to the company’s earlier fiscal 2029 target of over $10 billion, though he stopped short of providing specific updated figures.
Additional information will be disclosed at Marvell’s investor day scheduled for October 6.
Murphy indicated that custom-chip revenue is expected to more than double in the coming year. The Google collaboration encompasses AI processors, storage solutions, networking equipment, and memory hardware that interfaces with Google’s AI tensor processing units.
Looking ahead to Q3, Marvell provided guidance for adjusted EPS between $1.05 and $1.15, with revenue projected at approximately $3.15 billion at the midpoint. Wall Street had forecast EPS of $1.08 and revenue of $3.04 billion, meaning the guidance exceeded consensus estimates.
Extended-Term Revenue Projections Revised Higher
For the full fiscal year outlook, Marvell raised its fiscal 2027 revenue expectation to approximately $12 billion, up from the previous forecast of $11.5 billion. The fiscal 2028 projection was increased to $18 billion from $16.5 billion.
These represent substantial upward revisions. However, investors were hoping for stronger near-term results.
Bob O’Donnell, chief analyst at TECHnalysis Research, highlighted the competitive landscape. “I believe expectations around custom AI accelerator projects are riding very high, especially given the recent news about the Broadcom and OpenAI work on Jalapeno,” he said.
The competitive environment remains fierce. Major technology companies are aggressively pursuing internal chip development as an alternative to Nvidia’s premium-priced processors, positioning Marvell as a key beneficiary of this strategic shift.
Attention now turns to Marvell’s investor day on October 6, which represents the next significant event for stakeholders.
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