Alphabet (GOOG +1.44%) (GOOGL +1.71%) is currently the second-largest company in the world after Nvidia, and the tech giant's dominance in the search engine market has played a key role in helping it reach that position.
But the impressive thing about Alphabet is that it has consistently aimed to expand its footprint beyond the advertising business. From autonomous cars to cloud computing, smartphones, and artificial intelligence (AI) models, it's now in a broad array of tech businesses, and the semiconductor business is becoming another area where it's aiming to make a dent.
The in-house chip development efforts of its Google division have been paying off nicely in recent months. Originally intended for running the company's own workloads in the cloud, its Tensor Processing Units (TPUs) are now being deployed by Anthropic, while Meta Platforms is also reportedly going to deploy these chips to handle AI workloads.
Not surprisingly, Google is looking to push the envelope further in the AI chip department. A new report suggests that chip designer Marvell Technology (MRVL 0.76%) could become Google's new partner in its AI chip development efforts. This could be great news for the semiconductor company, shares of which have shot up by a remarkable 95% so far in 2026, and by 227% over the past year.
Image source: The Motley Fool.
Marvell Technology's custom AI processor business could get a big shot in the arm
Google has historically co-designed TPUs with Marvell's rival, Broadcom. It is worth noting that Google and Broadcom recently strengthened their relationship to develop future custom AI chips. However, it looks like Google is now looking to diversify its supply chain.
NASDAQ: MRVL
Key Data Points
Tech-focused business publication The Information reports that Google is reportedly in negotiations with Marvell to develop a couple of new custom AI chips. While one will be a TPU meant to run AI models, the other is reportedly going to be a memory processing unit that will support Google's TPUs.
The report further states that Google and Marvell plan to complete the design of the memory processing unit next year and send it to test production. While there has been no official comment on the report from either company, comments by Marvell management on the company's March earnings call suggest it could indeed be designing chips for Google.
The company noted that its Structera memory controller chip has been cited in a white paper by "a leading hyperscaler on next-generation LLM inference architectures" to improve the performance of AI models thanks to its near-memory processing capability. The Structera processor brings memory chips closer to AI accelerators, helping boost bandwidth and capacity to enhance performance.
At the same time, Marvell management remarked that the company is "seeing an unprecedented level of activity across multiple new engagements as hyperscalers increase their cadence of custom chip development." Another important point worth noting is that Marvell claims to have strong and broad relationships with the top four hyperscalers in the U.S. -- a group that includes Google.
Even better, the company pointed out that it has more than 20 chip designs selected for deployment by customers that are either already in production or will go into production in its fiscal 2028 and 2029. Marvell's fiscal 2027 began in February this year, so it won't be surprising to see the company indeed designing chips for Google based on the timeline reported by The Information.
Why the Google partnership could be a big deal for Marvell
Marvell plays second fiddle to Broadcom in the custom AI processor market. The company estimated that it controlled less than 5% of the custom silicon market in 2023. However, it expects to boost its share to 20% by 2028.
Importantly, Marvell estimates that its overall data center market share, including custom processors, switches, interconnect, and storage, could also jump to 20% in the next couple of years. If that's indeed the case, Marvell's data center business could generate almost $19 billion in revenue in 2028 based on the company's overall addressable market estimate of $94 billion.
That would be a solid improvement from its fiscal 2026, when its data center revenue increased by 42% to $8.2 billion. Moreover, a potential partnership with Google could unlock a solid long-term opportunity for Marvell. That's because Google's TPU business could witness eye-popping growth in the long run; the tech giant could corner a significant chunk of the overall AI chip market by selling its in-house chips to third parties.
So, don't be surprised to see Marvell's growth outpacing Wall Street's expectations in the coming years.
MRVL Revenue Estimates for Current Fiscal Year data by YCharts.
But even if the company's revenue only grows in line with consensus expectations and reaches $19 billion in fiscal 2029 (as per the chart above), its market cap could increase to $190 billion even if it trades at 10 times sales at that time (a discount to its current price-to-sales ratio of 15). That would be 38% higher than current levels.
However, this AI stock could deliver bigger gains, given its potential to clock stronger-than-expected growth that could lead the market to reward it with a premium valuation. That's why it would make sense to buy Marvell before it heads higher following the solid gains it has already clocked this year.
