Marvell's $120 Billion Google Deal Has a Catch: Investors Must Wait Until 2029

Marvell beats estimates but shares fall 14% as investors balk at delayed Google revenue, despite raised guidance and strong AI demand.

The market's reaction to Marvell Technology's latest earnings report reads like a paradox: record revenue, raised guidance, and a landmark hyperscaler agreement — yet the stock shed roughly a tenth of its value in a single session. The explanation lies not in the numbers themselves, but in the uncomfortable gap between what the company delivered and what investors had quietly hoped for.

Marvell posted $2.74 billion in revenue for the second quarter of fiscal 2027, a 37 percent year-over-year increase, with adjusted earnings per share climbing 40 percent to $0.94. The data-center segment, which now accounts for 79 percent of total revenue, expanded 46 percent to $2.17 billion. Full-year guidance stands at approximately $12 billion in sales, a 45 percent jump, while the following year is projected at $18 billion — revised upward from a prior $16.5 billion.

None of that prevented the August 28 sell-off that erased more than $17 billion in market capitalization. The culprit was the timing embedded in the company's expanded agreement with Google, a custom-chip deal that could reach $120 billion in cumulative volume through fiscal 2033. The catch: the bulk of that revenue doesn't begin flowing until fiscal 2029.

A Whisper Number Problem

Wall Street has an informal term for what transpired here: whisper numbers. Stocks don't trade on reported results so much as on the unspoken expectations circulating among buy-side investors. Marvell beat official consensus estimates on both the top and bottom lines, but a segment of the investment community had priced in faster monetization of the Google contract. When that didn't materialize, the shares paid the price.

The sell-off also fits a broader pattern across the AI trade. The momentum strategy that outperformed the S&P 500 through 2024, 2025, and the first half of 2026 is being unwound at multiple fronts, with investors taking profits wherever they can find them. Marvell, up roughly 227 percent over the trailing twelve months, was an obvious candidate.

A wider technology sell-off on Tuesday, triggered by rising bond yields, compounded the pressure — Qualcomm and Intel also slipped in the low single digits. Marvell's shares closed at €181.14, down 14 percent on the week, though still 149 percent higher year-to-date. The stock now sits 38 percent below its 52-week high of $290.35, reached just in June, while trading 38 percent above its 200-day moving average — evidence that the long-term uptrend remains intact even as short-term momentum has decisively turned. The 7.5 percent discount to the 50-day average underscores how quickly sentiment shifted.

Valuation Leaves Little Room for Error

At the time of the sell-off, Marvell traded at roughly 58 times forward earnings — an 82 percent premium to Broadcom's multiple of around 32. That kind of valuation gap demands accelerating growth to justify itself, and the market briefly balked when it became clear the Google windfall would take years to materialize in full.

The warrant structure adds another layer of complexity. The agreement includes warrants for nearly 59 million shares at an exercise price of $206.58, a detail that signals long-term commitment but also dilutes the near-term equity story.

Notably, the CEO sold $1.77 million worth of shares during this period — a transaction that caught the attention of CNBC's Jim Cramer, who advised against betting against the stock ahead of the company's October 6 analyst day. That event is expected to provide fresh detail on the Google partnership's trajectory and stands as the next meaningful catalyst.

The Bull Case Remains Intact

Analyst sentiment has barely budged. Thirty-six analysts rate the stock predominantly Strong Buy, with an average price target of $290.94. Melius projects earnings per share of $20 by decade's end — not an outlier view but part of a broader consensus that recognizes the operational substance beneath the volatility.

Operating margin reached 36.6 percent in the quarter, up 180 basis points year over year, with guidance of 38 to 40 percent for the fourth quarter. That profitability trajectory — keeping pace with growth rather than lagging it — tends to get lost in the noise of daily price action.

The competitive picture also appears less binary than some suggest. Broadcom's existing Google contract through 2031 isn't expected to be threatened by Marvell's expanded deal, indicating the custom-chip market has room for multiple winners.

The real question facing investors isn't whether Marvell participates in the AI infrastructure boom — it demonstrably does. It's whether they have the patience to wait until 2029 for the full payoff of a deal whose announcement already cost the company billions in market value. With annualized volatility of 88 percent, the market's answer so far is that patience comes at a steep price. The October analyst day will test whether the long-term thesis can reassert itself over the market's demand for immediacy.