Marvell Technology

Refresh delta (since 2026-07-25)

What changed

1. Google commercial agreement + warrant. On 2026-07-29 Marvell and Google signed a commercial agreement for custom silicon "that attach to the TPU ecosystem" — AI inference accelerators, storage controllers, NICs, memory interface controllers, near-memory compute. On 2026-08-18 Marvell issued Google a warrant for up to 58,970,907 shares at $206.58, expiring 2033-08-18: 1,360,867 vest quarterly over the first year; the rest vest in 240 equal tranches, one per $500M of Custom Products revenue, from Q3 FY2027 through FY2033 [primary: SEC 8-KForm 8-KA filing for something that happened between reports and matters enough to tell shareholders now. filed 2026-08-19, acc 0001193125-26-356217, Item 1.01/3.02]. Full vesting implies $120B of Google custom revenue. Management on the call: FY2028 programs under the agreement are already inside prior custom targets; the step-up is FY2029 and later.
2. Q2 FY2027 beat and a raised guide. Revenue $2,739.3M (+37% y/y, $39.0M above guidance midpoint); data center $2,171.5M = 79% of revenue, +46% y/y; GAAP GM 53.1%, non-GAAP GM 58.9%; GAAP diluted EPS $0.33, non-GAAP $0.94; Q3 guide $3.150B ±5%, non-GAAP EPS $1.10 ±$0.05.
3. FY2028 outlook raised twice in five weeks. May call: FY2028 ~$16.5B. Aug 27 call: FY2027 ~$12B, FY2028 ~$18B, data center >60% growth in FY2028. Investor Day 2026-10-06: FY2028 $20B (+67% on FY2027E $12B), FY2029 custom $12B+ (was $10B; ">3x FY29 vs FY28"), FY2031 revenue $70–90B, FY2031 non-GAAP model GM 56–59%, OM 44–46%, implied EPS >$30 [primary: Investor Day deck, investor.marvell.com IR calendar 20261006, slides 26–34, 136, 142–146].
4. Concentration rose. Distributor A was 44% of Q2 revenue (34% a year earlier); Customer A 16% (unchanged). Shipments to China 42% of revenue (29% a year earlier); the filing says most China shipments are to non-China customers' factories.
5. Balance sheet / capital. NVIDIA's $2.0B Series A convertible preferred (closed 2026-03-31, up to ~21.8M shares at ~$91.84) now sits in equity ($18.5B vs $14.3B at Jan-31); cash $3.9B, debt $5.0B senior notes; revolver upsized from $1.5B to $3.0B (+$2B accordion) on 2026-10-22. Dividend held at $0.06 [primary: 8-K filed 2026-09-25].

What held. The structural read — fabless custom-ASIC + optical DSP + interconnect, TSMC single-source, Marvell/Broadcom custom duopoly — stands. Electro-optics was named first among data-center growth drivers in the 10-QForm 10-QThe quarterly version of the annual report. Lighter, and not audited. MD&A; the deck shows a 3nm 1.6T PAM DSP in market and 2nm 3.2T DSPs demonstrated [10-q-2026-q3.md MD&A; deck slides on DSP roadmap]. Lens 2 (supply chain) unchanged.

The prior dossier's open item #1 (Trainium 3): still not testable from primary sources. Amazon, AWS and Trainium are not mentioned in the Q2 call transcript (0 hits); the Investor Day deck names AWS only on a quote slide about networks. The 10-Q names no XPU customer.

Phase A — Understand the business

Company Overview (custom definition widened)

Custom now means two things management sizes together: XPUs and XPU attach (CXL memory expansion, custom NICs, storage controllers, AI infrastructure management silicon, inference-offload co-processors). The deck sizes custom at ~$235B TAM in FY2031 and ~80% FY26–FY31 revenue CAGR for Marvell's custom line, against interconnect 65% ($65B TAM) and switching + storage 45% ($85B TAM) [deck slide 142]. Custom forecast: $12B+ FY2029, $30B+ FY2031 at midpoint [deck slide 136]. Scale-out switching guided to >$1B in FY2028; scale-up switching (UALink, ESUN, NVLink Fusion partnership) and scale-up optics (Celestial Photonic Fabric, NPO/CPO) described as additional multi-billion-dollar annual opportunities, unquantified [deck slide 135; transcripts/2026-q3.md].

Supply Chain — unchanged, see the previous dossier. One addition: prepayments on supply capacity reservation agreements rose to $487.0M (non-current) from $278.8M at Jan-31, and management plans ~$1B of capacity prepayments in FY2027; the 10-Q risk factor describes a multi-year TSMC capacity reservation with forfeiture if target wafer quantities are missed [10-q-2026-q3.md, Note 14 and Risk Factors; transcripts/2026-q3.md].

Moats — carried. The Google agreement is evidence of breadth inside one hyperscaler (five product categories), not of a new moat type.

Segments / mix

Communications & other fell ~3% q/q and management guided a low-to-mid-teens % decline in Q3 [transcripts/2026-q3.md].

Phase B — Measure performance

Earnings Result

• Revenue $2,739.3M; gross profit $1,455.6M; R&D $741.1M (+43% y/y); SG&A $257.6M; operating income $459.7M; net income $308.0M; diluted shares 921.2M [10-q-2026-q3.md, Statement of Operations].
• SBC $326.2M in Q2 vs $153.6M a year earlier; amortization of acquired intangibles $214.9M [10-Q segment expense table].
• H1 operating cash flow $1.2B (Q2 $605.5M per release); H1 capexCapital expenditureMoney spent on long-lived things — buildings, machines, servers — rather than on running costs. $282.4M; H1 buybacks $400.0M, dividends $107.7M [10-Q Cash Flows; Ex 99.1].
• Non-GAAP op margin 36.6%; management expects to enter the 38–40% target range in Q4 FY2027 [transcripts/2026-q3.md, Durn].
• Consensus beat/miss: not sourced against a primary consensus.
• Price: $238.81 (IBKR, 2026-10-27 intraday, realtime); 52-week range $70.63–$329.80; 13-week $162.90–$301.27. The July dossier recorded ~$196 on 2026-07-24.

Earnings Call (transcript read, transcripts/2026-q3.md)

Tone: confident, with numbers put up front. Murphy declined to size custom for FY2028 beyond "more than double" and pushed the Google sizing to Investor Day; he said custom programs from the agreement "will contribute much more significantly in fiscal '29." He described the Google warrant as disclosed because of its size and said other strategic partnerships exist that are not public. Risks raised by management: "pervasive industry-wide constraints" on supply; comms lumpiness; Q3 non-GAAP GM guide (57.5–58.5%) lower because custom mix rises. Analyst questions concentrated on how much of the $120B is already in guidance; no question on Trainium/AWS was asked or answered in the transcript.

Comps — carried; not re-sourced this pass.

Catalysts since July

• 2026-07-29 Google commercial agreement; 2026-08-18 warrant [8-K 2026-08-19].
• 2026-08-27 Q2 FY2027 print and raise [Ex 99.1].
• 2026-10-06 Investor Day: FY2028 $20B, FY2029 custom $12B+, FY2031 $70–90B [deck].
• 2026-10-12/13 product releases: second-gen Structera X CXL 3.2 memory expanders; 3.2T protocol-aware retimer and second-gen 1.6T AEC DSP; Microsoft/Oracle/Marvell OCP hardware-security working group [investor.marvell.com press releases].
• 2026-10-22 revolver to $3.0B [8-K 2026-10-23].
• Next: Q3 FY2027 print vs $3.15B guide (~late Nov/early Dec, date not read); first quarter in which Google performance tranches can vest.

Phase C — Judge people & books

Management — carried. Dan Durn (CFO since 2026-06-15) ran his first print and Investor Day; Ross Seymore joined as SVP Investor Relations [transcripts/2026-q3.md]. The ~56% say-on-pay vote from June stands as recorded in the July dossier.

Forensic Red Flags (new filing)

• Dilution stack grew. Google warrant up to 58.97M shares (≈6.6% of 897.4M Q2 basic weighted shares ); NVIDIA preferred up to ~21.8M; two older customer warrants (4.2M at $87.77, 1.0M at $87.00, the earlier one 1.2M vested); Celestial earnout payable in cash and stock through FY2029 [8-K 2026-08-19; 10-q-2026-q3.md Notes 2, 4, 10]. Together the disclosed maximums are ~86M shares before the Celestial earnout.
• Warrant accounting not yet seen. The two older customer warrants are recognised "as a reduction to revenue" as the customer hits revenue milestones [10-Q Note 2]. The Google warrant post-dates the quarter; its accounting will first appear in the Q3 10-Q. If it follows the same treatment, reported custom revenue is net of a warrant charge. Flag, not a finding.
• Celestial earnout and hedge move GAAP. Contingent consideration liability $749.5M at Aug-1 (+$433.7M fair-value change in H1, +$101.9M in Q2); a $300M-notional cash-settled forward stock purchase contract (April 2026, 12-month term) offset it with a $131.0M unrealized gain; the filing warns of a significant cash payment at settlement if the share price falls [10-Q Note 6 and Risk Factors].
• Concentration: Distributor A 44% of Q2 revenue; four customers 72% of gross receivables; receivables factored on a non-recourse basis during the quarter [10-Q MD&A; Liquidity].
• Insider activity: Form 4/144 filings continued in Aug–Oct (e.g. 2026-09-01/02, 09-15/16, 10-01, 10-08/09, 10-16) — listed on EDGAR, not read.
• SEC enforcement (LR/AAER): regulatory/regulatory-findings.md was not refreshed — the script skipped it on file mtime; its content is dated 2026-06-21 and found no LR. Carried, not re-checked.

Phase D — Project & stress-test

Forward Projection — not modelled (our model not run; our figures untouched). The company's own path: FY2026 $8.2B → FY2027E $12B → FY2028 $20B → FY2031 $70–90B [deck slides 33–34, 145]. Arithmetic checks for when the model is built: the FY2029 custom target "$12B+, >3x FY28" implies FY2028 custom of roughly $4B or less; Q3 guide $3.15B is +15.0% q/q. The July dossier's forward-multiple anchors (FY27e ~$3.60, FY28e ~$5.60 non-GAAP EPS) predate a $3.5B raise to FY2028 revenue and are stale.

Bull vs Bear

• Bull: a signed, disclosed contract with Google across five product lines, with up to $120B of revenue tied to it through FY2033; FY2028 raised twice to $20B; operating margin entering the 38–40% range this year; electro-optics leadership into 1.6T/3.2T.
• Bear: the warrant pays Google in equity for buying (up to ~59M shares); 44% of revenue through one distributor; custom mix lowers gross margin; the long-range targets ($70–90B FY2031) rest on hyperscaler capex that the July de-rate showed the market doubts; Trainium status still unknown from primary sources.
• Pre-mortem: Google's discretionary purchases run well below the $500M-tranche pace; FY2029 custom lands near the old $10B; the warrant shares still vest at the time-based floor and the earnout hedge settles against a lower share price.

Devil's Advocate — the warrant's vesting is tied to Google's purchases, so it aligns the customer — but the $120B is a ceiling written into a vesting schedule, not a commitment. The 8-K calls the purchases "discretionary."

Management Questions — carried from the previous dossier; add first: How will the Google warrant be accounted for — contra-revenue per tranche like the older warrants — and how much of FY2028's $20B is Google? Second: What is Marvell's content in AWS Trainium 3 today — full XPU, attach, or none?