Marvell Technology is set to release its fiscal Q2 2027 earnings, but investors shouldn’t expect significant revenue from its recent Google custom chip agreement. The bulk of this deal’s financial impact, tied to a warrant and discretionary purchases, begins measuring revenue from August 2026. Instead, the focus will be on Marvell’s ability to meet its Q2 guidance and, more critically, its outlook for the fiscal third quarter, which will offer the first glimpse of future Google-related projections.
Marvell Technology (MRVL) is gearing up to report its fiscal second-quarter 2027 results this Thursday, Aug. 27, with the crucial conference call scheduled for 4:45 p.m. ET. The chipmaker approaches this announcement on a high note, with its stock price soaring near $243, almost quadruple its 52-week low.
This significant upward trend was largely fueled by last week’s revelation of an expanded custom chip partnership with Google, a subsidiary of Alphabet (GOOG, GOOGL). This agreement also includes a warrant, potentially granting Google an equity stake of roughly 7% in Marvell.
While many investors might be eagerly anticipating the impact of this Google agreement in Thursday's financial figures, most of its effects are not yet reflected. Marvell's own filings clearly delineate when and where this landmark deal will begin to manifest in its numbers.
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The Google Revenue Stream is Just Starting to Flow
The agreement was formalized on July 29, falling within the fiscal second quarter of 2027, which concluded in early August. Despite this timing, investors expecting substantial Google-driven revenue to appear immediately in this report might be premature.
According to the agreement's terms, nearly all the warrant shares will vest in 240 tranches, each corresponding to $500 million in custom product revenue Marvell generates from Google and its affiliates. Crucially, this revenue recognition period spans from August 1, 2026, through January 29, 2033. This means that, for the quarter being reported Thursday, only a single day of the measurement period has elapsed, rendering any significant impact on current financials unlikely.
Furthermore, the custom programs themselves are in their nascent stages. Marvell is developing silicon for Google's in-house TPU chip ecosystem, including AI inference accelerators, storage, and memory interface controllers. Revenue from such development typically precedes that from high-volume shipments.
Consequently, Thursday's reported revenue will likely offer minimal insight into the financial magnitude of the Google partnership. The true barometer for this agreement's potential will be the forward-looking guidance management provides for the current quarter and beyond.
Unlike custom chip ramps, which adhere to their own schedules, a quarterly outlook is a mandatory component of the earnings call and cannot be deferred.
Setting the Bar for Thursday's Report
The upcoming quarter faces its own distinct test, one set by Marvell's management itself. The company projected fiscal second-quarter revenue to be $2.7 billion, with a +/- 5% margin. The midpoint of this guidance suggests an impressive 35% year-over-year growth, accelerating from the 28% growth achieved in the fiscal first quarter.
Guidance also anticipates earnings per share (EPS) of $0.37 on a GAAP basis and $0.93 on a non-GAAP (adjusted) basis, each with a +/- $0.05 variation.
Within the report, particular attention should be paid to the data center end market, which is where the custom chip business primarily resides. This segment alone generated $1.83 billion in the fiscal first quarter, representing a 27% year-over-year increase and comprising 76% of Marvell's total sales.
CEO Matt Murphy stated in the fiscal first-quarter report in May, "We expect revenue growth to continue accelerating each quarter throughout fiscal 2027, driven by continued strength in our data center business."
This statement establishes the benchmark for Thursday's performance. It necessitates that the fiscal second quarter meets its guidance, and more importantly, that the fiscal third-quarter outlook exceeds 35% growth—marking the first full quarter where Google's purchases would contribute to the warrant's vesting criteria.
Market Expectations Already Baked In
The market has not waited for these numbers. Marvell's market capitalization is approximately $213 billion, and the stock is trading at roughly 39 times its expected earnings for the upcoming fiscal year. A significant portion of this valuation surge occurred in the past week, driven by the Google agreement—an agreement characterized by discretionary purchases where Google dictates the pace, with no obligation to reach any specific total.
NASDAQ: MRVL
Key Data Points
It's also crucial to acknowledge the cost of this warrant to existing Marvell shareholders. The warrant encompasses nearly 59 million shares at an exercise price of $206.58, potentially increasing the total share count by approximately 7% if fully vested and exercised. Therefore, the promise of upside growth arrives alongside potential share dilution.
Marvell has an investor day scheduled for Oct. 6, which might provide a more comprehensive long-term outlook. However, that event is still six weeks away.
For now, investors should closely monitor whether management achieves or surpasses its guidance for the reported quarter, and critically, listen for any forward-looking commentary that sheds more light on the future financial implications of the Google agreement.
