Marvell Technology’s stock slid notably on Friday morning despite the semiconductor designer reporting stronger-than-expected guidance for the next two fiscal years. In premarket trading the shares fell 8% to $223.10 after investors focused on the timing of revenue tied to a recently announced custom-chip deal with Alphabet’s Google.
The contract, struck last week, has the potential to generate as much as $120 billion in revenue through fiscal 2033 and could position Google as one of Marvell’s largest shareholders. While the headline size of the agreement dominated investor attention, market participants appeared primarily concerned about when the bulk of that revenue will actually show up in Marvell’s results - a question that weighed on the stock despite the firm raising its near-term revenue outlook.
Analysts at Morgan Stanley said investor expectations were elevated largely because of the Google deal and noted that the agreement’s contribution had already been largely baked into prior guidance. Marvell’s CEO Matt Murphy told investors that the company’s custom revenue targets through fiscal year 2028 reflect some Google-related revenue, but that the deal would become a far more meaningful contributor in fiscal 2029.
The company now expects revenue to increase by about 45% in fiscal 2027 to roughly $12 billion, up from its prior forecast of about $11.5 billion, driven by stronger data-center demand. It also raised its fiscal 2028 revenue projection to about $18 billion, compared with a previous target of about $16.5 billion.
Market commentators have noted Marvell’s rapid appreciation this year, with shares nearly tripling in value. The company has been cast as a significant beneficiary of the surge in AI infrastructure investment as major technology firms increasingly pursue custom chips to enhance performance and cost efficiency.
“While the quarter and near-term guides weren’t overly exciting vs expectations, a combination of the GOOGL deal, prospects with Microsoft and AI connectivity upside could point to some big figures that make $20 in EPS power before the end of the decade look realistic,” Melius Research analysts said in a note.
Following the results, at least five brokerages raised their price targets on Marvell. The median target stood at $275, which implies a 13.8% premium to Thursday’s closing price, according to LSEG data.
Valuation metrics show Marvell trading at a premium to a major peer: its 12-month forward price-to-earnings ratio was 58.41 versus 32.15 for Broadcom, based on LSEG-compiled figures.
Context and market implications
Investor reaction to the Google agreement highlights the market’s sensitivity not only to the size of multi-year AI-related contracts but also to the cadence of revenue recognition. Marvell’s upgraded revenue outlook for fiscal 2027 and 2028 underscores stronger demand within its data-center business, yet questions about the timing of the Google-related revenue flow appear to have been decisive in traders’ near-term positioning.
For now, management’s public guidance indicates incremental Google-related sales are already included in near-term targets, with a more substantial uplift expected in fiscal 2029. How that timing plays out will be a key watch item for investors and analysts tracking the company’s progress in AI infrastructure markets.