Marvell Shares Fall 8% Despite Record Q2 Revenue as Google AI Deal Timing Disappoints Investors

Marvell Technology posted record fiscal second-quarter revenue of $2.739 billion, up 37% year over year and 13% sequentially, with data center revenue hitting a record $2.17 billion, up 46% year over year. The company raised its fiscal 2027 revenue outlook to approximately $12 billion and projected fiscal 2028 revenue of roughly $18 billion, implying about 50% growth. Despite beating consensus estimates and issuing above-consensus third-quarter guidance of $3.15 billion against a $3.04 billion forecast, shares fell roughly 8% to around $223.87, slipping below the 50-day moving average, as investors found the results too thin relative to elevated expectations built up by the stock's more than 160% gain year to date.

The central disappointment centered on Marvell's recently announced AI chip partnership with Alphabet's Google, which CEO Matt Murphy described as a 'monster number' in long-term potential, with one analyst estimating $120 billion in lifetime revenue. Investors wanted clearer near-term revenue contribution from the deal, but management indicated the Google relationship had already been contemplated in prior guidance, leaving the timeline for meaningful revenue recognition uncertain. Morgan Stanley, which kept an Equal Weight rating with a $246 price target, noted that guidance was in line with prior commentary and that the stock trades differently from peers, tending to execute to long-term forecasts rather than deliver short-cycle beats and raises, with its analyst day seen as the next major catalyst.

Despite the selloff, a broad group of analysts remained bullish: UBS reiterated Buy with a $310 target, Oppenheimer raised its target from $300 to $325, Needham raised its target to $300, and Wolfe Research, Stifel, Benchmark, and KeyBanc also reiterated positive ratings. Management signaled a strategic shift in growth drivers toward connectivity, optics, and a broad range of XPU-attach businesses rather than large monolithic custom ASICs, a mix analysts said supports margin expansion to 38 to 40% over time, though lower-margin custom silicon is currently pressuring gross margins. The fiscal 2027 guidance is heavily back-loaded, requiring a record fourth quarter to be met, which analysts flagged as an execution risk.

Jim Cramer argued the drop reflected valuation and profit-taking after a massive rally rather than any fundamental problem with the quarter.