Marvell shares gain on report of deal talks with Google to develop two AI chips

Marvell shares gain on report of deal talks with Google to develop two AI chips

Marvell and Google AI Chip Collaboration: Market Impact and Industry Context

April 20 (Reuters) - Marvell Technology's shares jumped nearly 5% on Monday following a report that Alphabet's Google is in talks with the chip designer to develop two new chips aimed at running AI models more efficiently.

Details of the Potential Deal

The potential deal could involve two distinct chips: a memory processing unit to complement Google's tensor processing unit and a new TPU built for running AI models, The Information reported on Sunday, citing two people with direct knowledge of the discussions.

Big Tech’s Custom Chip Strategy

Big Tech companies such as Google and Facebook-parent Meta are investing heavily to reduce dependence on external chip suppliers by expanding their custom chip efforts amid Silicon Valley's intensifying AI rivalry.

Google’s Current AI Chip Partnerships

Google deploys TPUs for training AI models and to respond to user queries, a process known as inferencing, and works with Broadcom to design its chips.

The report signals that Google might be looking to diversify from Broadcom amid surging demand for its chips as businesses seek alternatives to Nvidia's pricey chips.

AI lab Anthropic uses a range of chips, including TPUs designed by Google, to develop and run its AI software and chatbot Claude.

Industry Reactions and Competitive Landscape

Google and Marvell did not immediately respond to Reuters requests for comment.

"It should be no surprise that rivals (of Nvidia) will want to grab a piece of the market and the apparent growth on offer by developing their own product," said Russ Mould, investment director at AJ Bell.

"It also makes sense for customers to diversify their sources of supply, if they can, so they can spread technological and supply chain risk."

Meta and Broadcom’s AI Chip Partnership

Last week, Meta extended its deal with Broadcom to produce several generations of custom AI processors. The social media giant paid Broadcom $2.3 billion last year for AI chip design and related services.

Both Marvell and its larger rival Broadcom help clients with designing chips, as growing adoption of AI tools boost demand for specialized processors used in advanced data centers.

Financial Performance and Market Valuation

Marvell shares have gained about 64% so far this year, after declining roughly 23% in 2025.

Last month, Nvidia invested $2 billion in Marvell in an effort to make it easier for customers to use the custom AI chips that Marvell designs with Nvidia's networking gear and central processors.

Marvell, which expects its revenue to approach $15 billion in fiscal 2028, is set to add more than $6 billion to its market value of $122.15 billion, if the gains hold through the session.

Marvell trades at 33.35 times the estimates of its earnings for the next 12 months, compared with 27.84 for Broadcom.

(Reporting by Jaspreet Singh in Bengaluru; Editing by Arun Koyyur)