Marvell Technology, Inc. (NASDAQ:MRVL) is up more than 5% Wednesday after revealing a sweeping custom chip agreement with Alphabet Inc. (NASDAQ:GOOGL) (NASDAQ:GOOG) that could sharply expand its role in Google’s artificial intelligence infrastructure.
As part of the deal, Google received a warrant to buy nearly 59 million Marvell shares at $206.58 each, representing an aggregate exercise price of roughly $12.2 billion if fully exercised.
Marvell designs semiconductors used in data centers, networking and storage systems, and has become a major supplier of custom chips for cloud companies building their own AI infrastructure.
Under the new Google agreement, Marvell will help develop specialized chips used around Google’s Tensor Processing Units, or TPUs, its in-house alternative to Nvidia (NASDAQ:NVDA) GPUs for running AI workloads.
Google’s Warrant Is Tied to How Much Business Marvell Wins
Google does not get all the shares at once. Only about 1.4 million vest automatically over the first year.
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The remaining 57.6 million are tied to how much business Google sends Marvell, with roughly 240,000 shares vesting for every $500 million in qualifying revenue through early 2033.
If every tranche were earned, Marvell would have generated about $120 billion in qualifying revenue from Google-related purchases. The $120 billion is a vesting threshold, not a spending commitment.
Marvell said it will develop a range of custom silicon attached to Google’s TPU ecosystem, including AI inference accelerators, networking chips, storage controllers, memory interface controllers and near-memory computing technology.
Prediction Markets See Google Trailing in AI Race
Google’s push to expand its custom-chip ecosystem comes as it battles Anthropic, OpenAI and xAI for leadership in artificial intelligence.
Prediction traders remain skeptical. Polymarket gives Google just a 7% chance of having the world’s best AI model at the end of 2026, compared with 66% for Anthropic, 14.5% for xAI and 8% for OpenAI.
The Marvell agreement highlights another front in that contest: the race to secure cheaper, faster and more specialized computing infrastructure for increasingly demanding AI models.
Why Broadcom Is Falling
Broadcom Inc. (NASDAQ:AVGO) fell more than 5% on the news as investors weighed the threat from a second major supplier inside Google’s custom-AI-chip ecosystem.
Broadcom remains deeply entrenched at Google, having signed a long-term agreement in April to develop future TPU generations and supply components for next-generation AI racks through 2031.
The concern is not that Marvell is replacing Broadcom, but that it could capture a growing share of Google’s future AI silicon spending.
Marvell reports fiscal second-quarter earnings on Aug. 27, giving investors their first opportunity to press management for more detail on the scale and timing of the Google business.
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