Marvell Technology, Inc. (MRVL.US) reported Q3 results that exceeded expectations but still faced a vote with their feet reaction! Alphabet Inc. Class C's massive order of billions is a "distant water" that cannot quench immediate thirst.

Marvell Technology, Inc. (MRVL.US) released its financial report for the second quarter of fiscal year 2026 after market hours on Thursday, reporting adjusted earnings per share and revenue slightly higher than market expectations, alongside third-quarter guidance that also exceeded analyst predictions. However, the stock experienced a significant drop in after-hours trading, with the chip manufacturers share price falling over 7% as of the time of publication. Recently, Marvell Technology, Inc. reached a major AI chip collaboration with Alphabet Inc. Class C, but the company's long-term revenue outlook did not see a substantial upward revision. Market concerns about the timing of revenue recognition from Alphabet Inc. Class C orders overshadowed the positive revisions to revenue forecasts for fiscal years 2027 and 2028, leaving investors who anticipated this deal would accelerate performance growth disappointed. Since the beginning of the year, driven by the AI wave, the stock has nearly tripled in value. According to the financial report, the companys revenue for the second quarter increased by 37% year-on-year to $2.74 billion, surpassing the market expectation of $2.71 billion; adjusted earnings per share were 94 cents, also higher than the predicted 92 cents. For the current fiscal quarter, the company expects adjusted earnings per share to be $1.10, with revenue around $3.15 billion, while Wall Street's previous expectations were $1.08 and $3.04 billion, respectively. In the same period last year, the company's adjusted earnings per share were 76 cents, with revenue of $2.07 billion. Matt Murphy, the companys CEO, stated in a press release that the second quarter's performance benefited from strong and sustained demand for the data center product portfolio, with revenue in this segment accelerating to a 46% year-on-year growth. He further pointed out that AI-related orders remain exceptionally strong, indicating that revenue growth for the remainder of fiscal year 2027 is expected to accelerate further, and based on current momentum, the company is once again raising its revenue outlook for fiscal years 2027 and 2028, above the guidance provided last quarter. Last week, Marvell Technology, Inc. reached a custom chip agreement with Alphabets Alphabet Inc. Class C, which is expected to generate about $120 billion in revenue through fiscal year 2033, while Alphabet Inc. Class C will hold a stake of up to $12.2 billion, becoming one of the company's major shareholders. During the earnings call, when analysts pressed about why revenue related to Alphabet Inc. Class C would struggle to make a more substantial contribution in fiscal year 2028, CEO Matt Murphy responded that the companys custom chip revenue target through fiscal year 2028 partly includes this revenue and that it would show a more significant ramp-up in fiscal year 2029. He further noted that revenue from the custom chip business is expected to more than double next year, and the previously announced target of over $10 billion in fiscal year 2029 has an upside bias, but he refused to provide a new target, with specific guidance reserved for disclosure on the Investor Day on October 6. Bob O'Donnell, chief analyst at TECHnalysis Research, stated: Market expectations for custom AI accelerator projects are at an extremely high level, especially after recent news of Broadcom Inc. (AVGO.US) collaborating with OpenAI on the Jalapeno project. Clearly, expectations have outpaced reality, making it difficult for most companies, aside from NVIDIA Corporation (NVDA.US), to meet targetseven NVIDIA Corporation saw its stock price drop after announcing heavy annual forecasts. Major tech companies are increasingly investing in self-developed chips to reduce reliance on NVIDIA Corporation's expensive and supply-constrained processors, thereby driving a surge in demand for custom silicon from Marvell Technology, Inc., making it one of the main beneficiaries of the data center expansion wave. Additionally, as AI applications shift from model training to inference deployment, custom chips offer advantages in performance and energy efficiency compared to general-purpose processors, further boosting related demand. In this context, Marvell Technology, Inc. has raised its revenue growth expectation for fiscal year 2027 to approximately 45%, corresponding to an expected revenue of about $12 billion, up from the previous estimate of around $11.5 billion; at the same time, the revenue expectation for fiscal year 2028 has been raised from about $16.5 billion to approximately $18 billion, primarily due to increasing contributions from the data center business.