Marvell Technology shares fell more than 10% as investors reacted to a long timeline for significant revenue from its Google custom-chip partnership. Although the company reported record second-quarter revenue, a shift toward lower-margin products and a wait until fiscal year 2029 for major cash flow dampened sentiment for a stock that had tripled in 2026.
Marvell Technology shares faced a sharp decline, dropping over 10% on August 28, 2026, following the company’s latest financial report. While Marvell posted record revenue of $2.74 billion for the second quarter of fiscal 2027—a 37% increase compared to the previous year—investors shifted their focus from past success to future expectations. The sell-off highlights how the market's high hopes for the company's artificial intelligence strategy are hitting a reality check regarding timing and profitability.
The primary driver of investor frustration is the timeline for the highly anticipated partnership with Google. While the deal represents a massive revenue opportunity of up to $120 billion through fiscal year 2033, management clarified that significant revenue contributions are not expected until fiscal year 2029. This long lead time disappointed many growth-oriented investors who had already priced the stock for faster returns, given that the share price had nearly tripled earlier in 2026.
In addition to the revenue timeline, profit margins also came under pressure. Marvell provided guidance for third-quarter margins of 57.5% to 58.5%, down from 58.9% in the second quarter. The company explained that this dip is due to a product mix shift, where more of its business is moving toward custom-built chips. While these custom chips are key to long-term growth, they currently carry different margin profiles compared to the company’s standard products, leading to concerns about near-term profitability.
The stock's strong performance earlier this year has also left little room for error. Because the valuation had climbed so rapidly, even minor concerns about growth timing or margin compression have caused significant volatility. Investors have become more demanding, looking for clear proof that the company's AI-driven growth can consistently boost the bottom line without sacrificing margins.
Concentration risk remains another important factor. Data center revenue grew by 46% to $2.17 billion, now accounting for 79% of the company's total revenue. This high dependence on the data center sector means Marvell is deeply exposed to the spending cycles of large technology companies. If cloud providers or hyperscalers decide to slow their capital spending, Marvell’s results could be directly affected.
Looking ahead, investors will be closely monitoring how the company manages the transition toward its custom silicon business. The key monitorable will be the company's ability to maintain stable margins while scaling these new projects, as well as any updates regarding the milestones of the Google partnership. For now, the market is signaling that it prefers concrete, near-term earnings growth over long-term promises.