Marvell Technology (NASDAQ: MRVL) saw its shares tumble 6.9% in premarket trading on Friday, as investors digested an updated forecast from Google that shifts the timeline for meaningful AI-related revenue contributions to fiscal 2029. The decline, which brought the stock to $224.77 by 06:57 EDT, erased approximately $14.6 billion from the company's market capitalization, underscoring the market's sensitivity to the timing of high-stakes AI partnerships.
The sell-off came on the heels of Marvell's fiscal second-quarter earnings report, which showcased robust financial performance. Revenue surged 37% year-over-year to an all-time high of $2.739 billion, surpassing the midpoint of the company's guidance by $39 million. Adjusted earnings per share came in at $0.94, slightly above the Wall Street consensus of $0.93. GAAP diluted earnings rose to $0.33 per share, up from $0.24 in the same period last year.
Data-center revenue, the primary growth engine, jumped 46% to approximately $2.17 billion, representing nearly 80% of total sales. This segment has been the key driver of Marvell's valuation, as the company positions itself to capitalize on the explosive demand for custom silicon in AI infrastructure. Operating cash flow for the quarter reached $605.5 million, or 22.1% of revenue, reflecting solid operational efficiency.
Management raised its fiscal 2027 revenue outlook to approximately $12 billion, up from the previous $11.5 billion, and lifted the fiscal 2028 forecast to around $18 billion from $16.5 billion. For the upcoming third quarter, the company projects revenue of $3.15 billion (plus or minus 5%) and adjusted earnings per share of $1.10. These upward revisions suggest strong near-term momentum, but the market's focus has shifted to the longer-term trajectory of the Google partnership.
During the earnings call, CEO Matt Murphy clarified that current guidance already incorporates some revenue from the Google collaboration, but the most substantial impact is expected in fiscal 2029. This timeline extends beyond what many analysts had modeled following last week's announcement of the custom-chip alliance, which has the potential to generate up to $120 billion in revenue by fiscal 2033, according to a Reuters report. The delay in peak revenue contribution has raised questions about the pace of AI monetization and the sustainability of Marvell's growth narrative.
Despite the pullback, sell-side sentiment remains largely positive. At least five brokerages raised their price targets following the earnings release, with the LSEG median target sitting at $275—approximately 22% above Friday's premarket quote. However, valuation concerns persist. Marvell trades at 58.4 times forward earnings, a significant premium to Broadcom's 32.2 times, reflecting the market's high expectations for AI-driven growth. The stock has already surged 184% this year, leaving little room for disappointment.
Investors are also weighing several risk factors, including a concentrated customer base, potential supply constraints for advanced chips, and the possibility of program launch delays. The elevated valuation amplifies the impact of any deviation from long-term AI projections, making the stock particularly sensitive to news related to major customers like Google.
The premarket decline underscores a broader market trend where AI-related equities are increasingly priced for perfection. While Marvell's fundamentals remain strong, the extended timeline for Google's AI revenue contribution has introduced a new element of uncertainty. As the company navigates this transition, its ability to execute on near-term opportunities while managing long-term expectations will be critical to sustaining investor confidence.
