Marvell Technology disclosed on Wednesday that it has granted Alphabet's Google a warrant to buy nearly 59 million of its shares at $206.58 apiece, an aggregate value of roughly $12.2 billion if exercised in full. The warrant sits on top of a commercial agreement to supply Google with custom chips, and it did exactly what such disclosures tend to do: Marvell rose as much as 13% in Wednesday trading, while Broadcom, Google's established custom-silicon partner, fell several percent.
The structure: shares earned by purchase orders
The warrant is not a straight investment. Only about 1.4 million shares vest over the first year. The remaining tranches vest as Google actually buys chips, roughly 240,000 shares for every $500 million in qualifying revenue, running through Marvell's fiscal 2033. Fully exercised, the stake would amount to about 7% of the company.
That design ties Google's upside in Marvell's stock directly to how much business it sends Marvell, an increasingly common arrangement in AI-era supply deals, where equity sweeteners bind customers and suppliers together over multi-year buildouts.
What Marvell will build
The commercial agreement covers silicon that surrounds Google's tensor processing units, the custom AI accelerators at the heart of its data centers. The scope includes AI inference accelerators, storage controllers, network interface controllers, memory interface controllers, and near-memory compute, the supporting cast of chips that move and store data around the TPUs themselves.
Why Broadcom fell
Broadcom has been Google's lead partner on TPU development for years, and Google ranks among its most important customers, so any evidence of a second supplier winning a slice of that program reads as share loss. Broadcom traded down about 3% on Wednesday, with some coverage putting the decline as deep as 5% during the session.
The counterargument, made in several analyst commentaries on the deal, is that Google's total demand for custom silicon is growing fast enough that a new supplier reflects an expanding pie rather than a reshuffled one. Marvell's contract centers on the peripheral chips around the TPU ecosystem, a role that overlaps only partly with Broadcom's core TPU work.
The wider pattern
The deal extends a trend that has defined this year's AI trade: hyperscalers locking in silicon supply with structures that go beyond purchase orders, including warrants, prepayments, and long-term commitments. For investors, the fine print matters. Marvell's headline number, $12.2 billion, is the value of shares Google may buy, not revenue Marvell has booked. The revenue arrives only if Google keeps ordering chips, which is precisely what the vesting schedule is designed to encourage.
