Inside Google’s $12 Billion Stake in Marvell—and Why It’s Bad News for Broadcom.

Marvell and Google are in a collaboration to make the hyperscaler’s custom chips. (Cheng Chia Huang/Getty Images)

Key Points

• Marvell Technology shares rose after the company issued Google a warrant to purchase up to 59 million shares, representing a $12.2 billion stake.
• The partnership covers large aspects of Google’s in-demand chips, including its tensor processing units, or TPUs.
• Most of the warrants can only be exercised if Google reaches certain discretionary purchases through fiscal 2033.

Shares of Marvell Technology surged Wednesday after the company announced it has issued Alphabet -owned Google a warrant to purchase up to 59 million shares, or take a $12.2 billion stake in the chip maker.

Marvell in a regulatory filing on Wednesday said Google received a warrant on Tuesday to purchase up to 58.97 million shares of common stock at an exercise price of $206.58 a share. That equates to a $12.19 billion stake in Marvell.

Marvell stock advanced 6% to $228.80 on Wednesday after falling 7.8% on Tuesday. Broadcom , which has long been Google’s major chip partner, declined 5.4%. Broadcom announced in April a long-term agreement with Google to develop ​and supply custom artificial-intelligence chips through 2031.

Marvell issued the warrant as part of the two companies’ commercial agreement on the development of Google’s custom chips. The partnership covers large aspects of Google’s in-demand chips, including its tensor processing units, or TPUs.

Most of the warrants issued on Tuesday can only be exercised by Google if the company hits certain “discretionary purchases” through fiscal 2033.

Demand for Google’s in-house chips has risen as many companies look to diversify and reduce dependence on Nvidia.

Alphabet in late July raised its 2026 forecast for AI spending to between $195 billion and $205 billion on capex, compared with its prior guidance of $180 billion to $190 billion.

Marvell stock has surged 169% this year and has gained 221% over the past 12 months.

Write to Kit Norton at kit.norton@barrons.com

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