Marvell sees Google ASIC attach revenue potential; stays Overweight at JPM
Marvell (MRVL) remains an JPM Overweight with a $240 price target as JPM models the Google ASIC deal structure implying ~$19.2bn of potential attach revenues per year through FY33.
MRVL Overweight @ JPM pt 240 "We think it is important to clarify that we do not interpret the announcement as a core TPU accelerator win, as the custom silicon programs highlighted appear to be XPU attach/TPU-adjacent products (e.g., chips that sit next to the core TPU chip; MRVL referred to them as 'programs that attach to the TPU ecosystem').
Nonetheless, according to our math, the structure of the deal implies an average ~$19.2bn of potential Google ASIC attach revenues per year for MRVL through FY33 (240 tranches * $500m = $120bn of revenue over 6.25 years), which would put the team's AI ASIC business well above its prior analyst day target of ~$11B in total AI ASIC revenues in CY28.
We believe most of the revenue under this agreement is incremental to current market expectations, and after flowing the deal through our model, we can see a path toward ~$11.00 of earnings power by CY28, materially above current Street estimates of $9.52.
Although the agreement does not represent a formal purchase commitment from Google, we believe it does showcase the potential scale of MRVL's opportunity and could support positive upward revisions if/when purchases begin to ramp.
We also think the announcement reflects Google expanding custom silicon development beyond the core TPU chip and into adjacent areas such as networking, storage, memory interfaces, and near-memory compute, where multiple partners can participate.
Analyst: Harlan Sur