Marvell (MRVL) Shares Drop 6% Despite Earnings Beat on Google Revenue Timeline Concerns

Key Takeaways

• Shares of MRVL declined more than 6% during after-hours trading following Thursday’s fiscal Q2 earnings release
• The company delivered adjusted earnings per share of 94 cents versus the 93-cent consensus; sales of $2.74 billion surpassed the $2.72 billion projection
• As part of a custom AI chip partnership potentially worth $120 billion through fiscal 2033, Google obtained a warrant for a $12.2 billion position in Marvell
• The company boosted its fiscal 2027 sales outlook to approximately $12 billion and fiscal 2028 projections to roughly $18 billion
• Market participants expressed concern that meaningful Google deal contributions won’t materialize until fiscal 2029

Shares of Marvell Technology had climbed 184% through 2026 heading into Thursday’s quarterly report. However, following the earnings announcement, the stock retreated over 6% in extended trading sessions.

Marvell Technology, Inc., MRVL

The financial performance was undeniably strong. The semiconductor company reported adjusted profit of 94 cents per share for its second fiscal quarter, exceeding analyst projections of 93 cents. Sales jumped 37% from the year-earlier period to reach $2.74 billion, surpassing the Street’s $2.72 billion forecast.

What triggered the selloff? Market expectations had become extremely elevated.

The chip manufacturer has emerged as one of this year’s strongest performers in the artificial intelligence sector. Such dramatic appreciation creates pressure for companies to exceed expectations significantly, rather than merely meet or modestly surpass them.

The partnership with Google was anticipated to serve as a major growth driver. Last week’s announcement revealed that Alphabet’s Google obtained a warrant allowing it to acquire up to $12.2 billion worth of Marvell shares, linked to a custom AI semiconductor collaboration potentially generating $120 billion in sales through fiscal 2033.

While the overall opportunity is substantial, the revenue recognition timeline became a sticking point.

Material Google Contributions Pushed to 2029

During the earnings conference call, CEO Matt Murphy clarified that meaningful revenue from the Google collaboration won’t begin flowing until fiscal 2029. This timeline disappointed some Wall Street analysts who had anticipated a more immediate financial impact.

Murphy addressed the concerns by explaining that Marvell’s custom silicon revenue projections through fiscal 2028 already incorporate some Google business. He suggested there’s an “upside bias” to the company’s previous fiscal 2029 target exceeding $10 billion, though he refrained from providing a specific updated figure.

Additional specifics are being reserved for Marvell’s investor day scheduled for October 6.

The CEO did indicate that custom-chip sales would more than double in the coming year. The Google arrangement encompasses AI processors, storage solutions, networking equipment, and memory components that integrate with Google’s AI tensor processing units.

Looking to Q3, Marvell projected adjusted earnings per share between $1.05 and $1.15, with revenue centered around $3.15 billion. Wall Street had anticipated EPS of $1.08 and sales of $3.04 billion, meaning the company’s outlook exceeded consensus estimates.

Extended Outlook Receives Boost

For the broader fiscal picture, Marvell increased its fiscal 2027 revenue projection to approximately $12 billion, representing an upgrade from the previous $11.5 billion estimate. The fiscal 2028 forecast was elevated to $18 billion from $16.5 billion.

These represent substantial increases. However, investors had hoped for more aggressive near-term growth.

Bob O’Donnell, chief analyst at TECHnalysis Research, highlighted the market context. “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 landscape remains fierce. Major technology companies are aggressively pursuing proprietary 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 has become the next critical event for shareholders.