Marvell's stock pops on news of Google chip deal - and Broadcom's falls

By Emily Bary and Britney Nguyen

Google will also get the option to purchase about $12 billion worth of Marvell's stock

Marvell expanded its partnership with Google.

Marvell Technology shares gained about 10% on Wednesday after the company announced a new agreement with Alphabet related to custom artificial-intelligence chips.

The company disclosed Wednesday that it has struck a commercial agreement related to Google's (GOOG) (GOOGL) tensor processing units. "The expanded partnership spans a comprehensive range of custom silicon programs" related to TPUs, including accelerators and storage controllers.

Additionally, Marvell (MRVL) said in a filing that it has issued Google a warrant that gives that company the option to buy up to 58,970,907 Marvell shares at $206.58 apiece. That comes out to over $12 billion if fully exercised.

Shares of Broadcom (AVGO), which is known for being a major partner in Google's TPU efforts, fell 4.6% on Wednesday.

D.A. Davidson managing director Gil Luria said Google looks to be diversifying the sources of its chips as the company ramps up its computing capacity.

"Its in-house TPU program has been very successful, and they will create multiple variations of that program," Luria said in emailed comments.

He added that Google's stake in Marvell "is a bad sign for Broadcom since it creates a better alignment" between Google and Marvell.

Broadcom's dominance in developing TPUs has become a topic on Wall Street amid reports that Google has worked with Taiwan-based MediaTek to co-develop future generations of the chips.

Still, Broadcom said in April it was extending its partnership with Google through 2031 to provide the company with TPUs and networking equipment.

Broadcom also has a partnership with Meta Platforms (META) to develop its Meta Training and Inference Accelerator chips, which are used to train and run the company's ranking and recommendation systems, as well as its AI models and offerings.

Bernstein analyst Stacy Rasgon noted that Broadcom didn't grant warrants for either of those deals. Additionally, the company's guidance for more than $100 billion in AI revenue next year, which looks to be in line with Marvell's target for its collaboration with Google, strikes him as conservative.

Rasgon said in a note to clients that the competition among chip makers should be focused on the size of the opportunity, rather than on winners and losers.

"There is probably plenty to go around for everyone, especially in the current environment which remains compute constrained," Rasgon said, referring to the idea that there isn't enough AI chip supply to meet customer needs.

While Broadcom's stock was taking a hit from the announcement Wednesday, Rasgon said "it might not take all that much to get it working again," as investors will get a better view into the company's revenue and product trajectory for the next few years. That could come with Broadcom's earnings report in September.

-Emily Bary -Britney Nguyen

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08-19-26 1726ET