JPMorgan Reiterates Overweight Rating on Marvell (MRVL)

JPMorgan analyst Harlan Sur reiterated an Overweight rating and $240.00 price target on Marvell (NASDAQ: MRVL)

The analyst comments: “Earlier this morning, Marvell Technology Inc. (MRVL) announced an expanded long-term partnership with Google to develop a broad portfolio of custom chips/ ASICs that support Google’s TPU ecosystem (not a TPU win, but chips that support TPU), including an AI inference offload engine (SRAM-based, LPU-like architecture), silicon, storage controllers, NIC/SmartNIC/DPU-style controllers, and CXL-based memory interface controllers. Based on the initial market reactions, we suspect that there was some confusion around the language MRVL used in its 8-K, specifically in its reference to “AI inference accelerators.” However, 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 it 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 (see here). 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 today 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. All told, we see today’s announcement as a clear positive for MRVL and a broader validation of the growing custom ASIC TAM. The deal adds another leg to MRVL’s multi-year data center growth story, creates a clearer path to upside versus current FY27/FY28 Street revenue estimates, and reinforces our view that MRVL is becoming an increasingly important merchant silicon partner to hyperscale AI infrastructure customers.”

For an analyst ratings summary and ratings history on Marvell click here. For more ratings news on Marvell click here.

Shares of Marvell closed at $237.27 yesterday.

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