Marvell Technology (MRVL) will help develop Google’s custom chips and has given the tech giant an option to become one of its largest investors through a stake purchase of as much as $12.2 billion.
Shares of the chipmaker jumped more than 11% in premarket trading following the announcement, reflecting strong investor enthusiasm for the new partnership.
Larger rival Broadcom (AVGO), which has been Alphabet-owned Google’s main custom chip partner, fell over 2% on the news.
Demand for in-house chips such as Google’s tensor processing units, known as TPUs, has surged as companies seek cheaper alternatives to Nvidia’s graphics processors.
Companies are also pursuing technologies better suited for inference, the process of running trained AI models, which has reshaped priorities across the semiconductor industry.
Under the deal, Marvell issued Google a warrant to purchase up to 58.97 million shares of common stock at an exercise price of $206.58 per share, equivalent to roughly 7% of Marvell’s outstanding shares.
The $12.18 billion figure represents what Google would pay if all 58.97 million warrant shares vested and Google exercised them for cash at $206.58 each, rather than an upfront investment or guaranteed payment.
Only 1.36 million shares covered by the warrant will vest through equal quarterly installments during the first year of the agreement.
The remaining shares will vest in 240 equal tranches beginning in Marvell’s third quarter of fiscal 2027, with each tranche vesting when Marvell records $500 million in revenue from custom products purchased by Google and its affiliates.
Broadcom currently holds more than 70% of the custom AI chip market and has forecast $100 billion in AI chip revenue by 2027, giving it a commanding position that the new Marvell deal now puts under pressure.
Broadcom signed a separate long-term agreement with Google in April 2026 covering future generations of custom AI chips and components for next-generation AI racks through 2031.
The more realistic interpretation of the competing deals is that Google is building a broader supplier network rather than replacing Broadcom outright with Marvell.
Large cloud companies commonly divide chip work across several suppliers to secure capacity, improve negotiating power, and reduce dependency on any single chip designer.
Marvell Technology stock had already climbed 155% year to date through Tuesday’s close, a move driven by rising confidence in its custom silicon roadmap ahead of this announcement.
