Marvell gives Google $12.2 billion stake in custom Ai chip deal, stock surges

Marvell Technology has given Google the right to purchase up to 58.97 million of its shares, a position said to be worth about $12.2 billion if fully exercised, with most of the stake being related to Google’s spending on custom chips until fiscal year 2033.

The deal deepens Google’s push to build its own AI silicon and sent Marvell’s stock surging on Wednesday.

Stake increases with Google’s spending

The warrant carries an exercise price of $206.58 per share and runs until August 18, 2033, according to Marvell’s filing with the US SEC. The chip maker issued it on August 18, even though the underlying commercial agreement was signed weeks earlier on July 29.

However, only a bit of the stake is guaranteed, with about 1.36 million shares vested in equal quarterly pieces over the deal’s first year. The rest, equal to about 57.61 million shares, is spread across 240 segments that unlock one at a time, each triggered by another $500 million in custom-chip revenue that Google generates for Marvell. These segments will run from Marvell’s third quarter of fiscal year 2027 until the end of fiscal year 2033.

This means Google’s ownership will climb relative to how much it procures. The warrant also cannot be handed to anyone outside Google’s controlled affiliates without Marvell’s sign-off, according to the filing.

Chips built for Google’s TPU stack

The partnership centers on Google’s tensor processing units, the custom chips Google designs to run AI workloads without leaning on Nvidia’s general-purpose processors.

Under the agreement, Marvell will supply a spread of components that plug into that ecosystem, which include AI inference accelerators, storage and network interface controllers, memory interface controllers, and near-memory compute.

Reuters reported that if fully exercised, Google’s stake would rank the tech giant as Marvell’s fifth-largest shareholder.

Marvell waltzes into Broadcom’s territory

Broadcom signed its own long-term agreement with Google in April to develop future generations of custom AI chips and related components, a deal that runs until 2031.

The competitive nature of Google’s deal with Marvell hit Broadcom’s stock significantly, as its shares dipped by more than 2% in premarket trading on Wednesday.

The driver for these deals remains the same within the chipmaking sector. Buyers continue to search for cheaper, workload-specific alternatives to Nvidia’s graphics processors, and demand for custom silicon aimed at AI inference has increased.

Investors rewarded Marvell, as the stock surged 10.94% to $239.62 in early Wednesday trading and hit an intraday high of $245.49, up from Tuesday’s close of $216. Alphabet’s own shares barely moved on the news.

The stock has gained about 200% over the last six months, climbing from $79.61 on February 19 to about $239 over this period.

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