Marvell Shares Fall 8% as Investors Question Google AI Chip Payoff

Marvell Technology’s stock dropped by more than 8% in early trading on August 28 to $221.6. The drop was triggered by investor concerns over the company’s long-term growth prospects. Marvell stock plunged after the company announced a partnership with Google last week, raising investor expectations.

The deal between Marvell and Google could generate up to $120 billion in revenue through fiscal 2033. The agreement also gives Google the right to purchase up to $12.2 billion worth of Marvell shares, potentially making it one of the company’s largest shareholders.

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How Investor Concerns Caused Mervell’s Stock to Fall

Increasingly, investors are expecting stronger results from companies that are riding the AI boom. Marvell Technologies has become a major beneficiary of the AI boom as leading tech companies turn to custom chips to improve efficiency and performance.

The company manufactures networking, connectivity and custom processors that tech firms use in AI data centers. Rising demand for AI chips has caused Mervell’s shares to nearly triple in value this year. On August 27, the chipmaker said it expects its revenue to grow by about 50% year-on-year to reach $18 billion in 2028, up from the previous target of about $16.5 billion.

But the forecast was overshadowed by concerns on how quickly the company’s deal with Google would start contributing to revenue. Mervell’s AI chip deal with Google is expected to generate up to $120 billion in revenue through 2033. Under the deal, Marvell will supply a range of products, including storage controllers, AI inference chips, and network inference controllers, to support Google’s TPU systems.

Analysts Take on Mervell’s AI Revenue Prospects

On August 27, about eight analyst firms had projected an increase in Mervell’s stock price after the earnings report. Data compiled by LSEG placed the median stock price at $275, implying a 13.8% increase.

“While the quarter and near-term guides weren’t overly exciting vs expectations, a combination of the Google deal, prospects with Microsoft and AI connectivity upside could point to some big figures that make $20 in EPS power before the end of the decade look realistic,” Melius Research analysts said in a note as cited by Reuters.

During the earnings call on August 27, Marvell attributed revenue growth to growing demand across its data center portfolio. The company reported a 46% revenue growth year-on-year in this business unit.

According to Marvell Chairman and CEO Matt Murphy, “AI-related bookings remain exceptionally robust, and we expect our revenue growth to accelerate further through the remainder of fiscal 2027.”

What the Marvell Stock Decline Means for Tech Firms

Mervell’s stock decline shows that tech firms tied to the AI boom may face rising investor scrutiny and higher expectations. Going forward, companies will need to show that major AI partnerships can translate into near-term revenue and sustainable growth. For Mervell, delivering on its forecasts will be key to maintaining investor confidence.