Marvell Technology (MRVL) surged 7% in premarket on a report that Alphabet's Google (GOOGL) is in discussions to develop two new AI chips with the company, according to The Information. The prevailing narrative is that Marvell is seizing momentum as Big Tech pushes for more custom silicon, especially as hyperscalers look beyond Nvidia. But today's surge prompts a deeper look at what is and isn't confirmed so far.
Marvell-Google AI Chip Talks Still Early — No Deal Yet
The facts: The Information, as cited by Reuters and Channel News Asia, reported that Google is in discussions with Marvell to co-develop two chips — a memory processing unit to complement Google's tensor processing unit (TPU), and a new TPU designed for AI inferencing. The key term is discussions: no contract or commercial agreement has been announced, and neither company has commented publicly on the talks.
Google currently works with Broadcom (AVGO) to design its AI chips, and just last week Meta renewed its deal with Broadcom to produce several generations of custom AI processors, reportedly paying $2.3 billion in 2025 for AI chip design and related services. This renewal underscores Broadcom's entrenched role with hyperscale clients. The report of Google speaking to Marvell could reflect genuine diversification — or simply a bid for better terms in negotiations with Broadcom as demand for AI chips accelerates.
Stocks365 Take — Valuation Premium Hinges on Unconfirmed Catalysts
Excitement about potential new custom chip deals has pushed Marvell to trade at 33.35 times forward earnings, notably higher than 27.84 times for Broadcom. By contrast, Broadcom has recently cemented further business with Meta, supported by direct payments and multi-year contracts. For investors, much of Marvell's premium appears to be pricing in a win that remains speculative. Without a confirmed deal or commercial details, the risk is that the premium may fade if talks stall or competition remains fierce.
AI Chip Supplier Trends: Lessons from Past Cycles
The current enthusiasm resembles the late 2021-early 2022 custom chip cycle, when news of in-house silicon efforts at major cloud providers sparked rapid multiple expansion for semiconductor names. While custom chips are increasingly critical, previous market surges based on preliminary deal talk often faded until details materialized—and valuations only proved durable after confirmed execution.
What to Watch: Deal Confirmation and Valuation Spread
Investors should monitor whether Marvell and Google move from discussion to an actual supply agreement — with specifics on chip design, volume, and revenue contribution. A formal announcement could provide justification for Marvell's current valuation. Conversely, a stall in talks, or a fresh renewal between Google and Broadcom, could reverse the spread. The relative moves of Broadcom and Marvell, especially if Broadcom rallies in tandem, will offer clues about whether the market views this as a sector-wide trend or a zero-sum battle.