On August 28, Marvell Technology (NASDAQ:MRVL) shares fell more than 8% to $221.60, wiping out over $17.4 billion in market value in a single session. The drop came a day after the chipmaker posted record quarterly results and raised its own growth targets for fiscal 2027 and fiscal 2028. That combination, strong numbers paired with a falling stock, says a lot about how far investor expectations had run ahead of the business. Big Tech’s AI spending is on pace to top $740 billion this year, and Marvell had become one of the names investors leaned on to prove that spending was actually reaching chip demand.
Growth Still Outrunning Expectations
The underlying business is not the problem. Marvell’s fiscal second-quarter revenue hit $2.739 billion, up 37% year over year and $39 million above the midpoint of the guidance it gave back on May 27, 2026. Data center revenue, the segment most tied to AI infrastructure, grew 46% year over year, an acceleration from prior quarters. Non-GAAP net income came in at $865.9 million, or $0.94 per diluted share, while cash flow from operations reached $605.5 million.
Management used that strength to raise guidance twice over, with fiscal 2027 revenue now expected to grow about 45% and fiscal 2028 revenue projected to reach roughly $18 billion. Layered on top is the custom-chip agreement with Google (NASDAQ:GOOGL), which gives Google the right to buy up to 58.97 million Marvell shares at $206.58 each as it hits purchase targets through fiscal 2033, tied to products supporting Google’s TPU systems. Melius Research pointed to that deal alongside prospects with Microsoft as reasons a figure like $20 in earnings per share before the decade ends could be realistic. At least eight brokerages raised their price targets after the results, with a median target of $275.
Patience Is The New Price
The gap between the results and the reaction comes down to timing. CEO Matt Murphy said the Google-related revenue already built into Marvell’s targets through fiscal 2028 is modest, and that the relationship becomes far more meaningful in fiscal 2029. Morgan Stanley analysts noted the deal’s upside was largely already embedded in the company’s prior guidance, which left investors hoping for an immediate step-change in numbers waiting instead.
Goldman Sachs, which kept a neutral rating on the stock, called the quarter only an “incremental positive” and flagged that Marvell trades at a richer valuation than its peers while carrying less certainty about its ability to land new custom-chip customers. Marvell also offered limited detail on its fiscal 2028 outlook, leaving investors with fewer specifics to underwrite the higher expectations that had built up around the stock.
What The Positioning Data Shows
Hedge fund ownership rose to 96 funds last quarter from 79 in the prior one, which points to accumulating institutional conviction heading into the print. Short interest sits at just 3.79% of the float, low enough to suggest little organized skepticism toward the stock. Yet Marvell trades at 59.52 times forward earnings as of August 28, a multiple that only makes sense if the Google-driven growth story fully plays out. That combination, rising ownership, light skepticism, and a rich multiple, leaves the stock priced for a smooth outcome with little room for a disappointing quarter.
The Next Marker Is Fiscal 2029
Marvell’s near-term numbers are strong, yet the stock fell because investors wanted proof the Google deal changes growth today, not three years from now. The bulls can point to accelerating data center revenue and repeated guidance raises as evidence the AI buildout keeps favoring Marvell’s chips. The skeptics will note that the stock’s premium valuation leaves little room for error if the newer deals take longer than fiscal 2029 to scale.
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