Marvell Sinks 6% as Google Warrant Dilution Overtakes the Deal Rally; Broadcom Ticks Up

David Moadel

Fri, August 21, 2026 at 7:06 PM GMT+3 5 min read

Quick Read

Marvell drops 6% while Broadcom rises 1%, as Marvell's 58x forward P/E leaves far more room to reprice warrant dilution than Broadcom's 20x.
The SOXX ETF's 0.8% dip confirms Marvell's selloff is a single-name dilution debate, not a broad rotation out of AI semiconductors.
Google's warrant covers 59 million Marvell shares at $206.58, which is below today's price, meaning dilution grows in direct proportion to the deal's success.
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The market spent Thursday pricing the revenue in Marvell's new deal with Alphabet's (NASDAQ:GOOGL) Google. Friday is about the dilution that pays for it, and the tape is telling two very different stories across custom AI silicon.

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Marvell Technology (NASDAQ:MRVL) stock is down 6% to $235.20 in Friday morning trading, giving back part of a 196% year-to-date advance through Thursday's close. Meanwhile, Broadcom (NASDAQ:AVGO) stock is up 1% to $368.46, with the incumbent custom-silicon supplier on Google's TPU quietly firming as its challenger sells off. For context, shares of the iShares Semiconductor ETF (NASDAQ:SOXX) are down 0.8% to $518.43, a modest slip that isolates today's Marvell move as a single-name event. Alphabet stock was up 9% year to date through Thursday's close, a very different setup than the AI-silicon names being repriced today.

Warrant Dilution Takes Over the Deal Narrative

Marvell disclosed on August 19 that it granted Google a warrant to buy up to 58,970,907 Marvell shares at $206.58, worth roughly $12.18 billion at the strike. Approximately 1.4 million warrant shares vest during the partnership's initial year, and subsequent tranches unlock incrementally as Google commits to chip purchases in $500 million installments. Coverage extends across AI inference accelerators, storage controllers, networking and memory-interface controllers, and near-memory computing tied to the Tensor Processing Unit ecosystem, with a performance-based tranche linked to custom-product revenue through fiscal 2033.

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Here's the catch for shareholders: the $206.58 strike sits below where Marvell shares trade now. A meaningful slice of future appreciation is already promised to the customer rather than to existing holders, and the vesting schedule ties dilution directly to commercial success. The equity give-away grows precisely as the relationship works. This trade-off is what the market is repricing after buying Thursday's revenue headline at face value.

Underneath the deal, Marvell's fundamentals remain strong. Q1 fiscal 2027 revenue came in at $2.418 billion, up 27.6% year over year, with data center revenue of $1.83 billion representing 76% of the total. Management guided Q2 fiscal 2027 to $2.7 billion and raised fiscal 2027 and fiscal 2028 outlooks on what CEO Matt Murphy called "exceptional AI-related bookings". The Google warrant is the price of validating the custom XPU pipeline Murphy has been building.

Where Marvell and Broadcom Diverge

Broadcom is the direct custom-ASIC competitor and the incumbent on Google's TPU, so a Marvell win should read as a Broadcom loss. Yet, the tape says otherwise. Broadcom shares trade at a forward P/E ratio of 20x against Marvell at 58x, with the stock up 6% year to date while Marvell stock is up 196%. Marvell carries far more embedded expectation and far more room to give back in a dilution debate. Scale also matters: Broadcom's much larger revenue base and $1.76 trillion market cap mean one hyperscaler socket moves it less in either direction.

Wall Street's Thursday response was uniformly constructive. BMO Capital Markets initiated coverage with an Outperform rating and a $250 price target. Roth Capital raised its target to $350 from $275 with a Buy rating, UBS lifted its target to $310 from $300, and Jefferies held a Buy rating with a $325 price target. Those calls arrived before the market fully absorbed the warrant math driving today's decline.

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What to Watch

The SOXX ETF's 0.8% pullback confirms that semiconductors as a group are not selling off, which makes today a single-name dilution debate rather than a sector rotation. That's why Broadcom can rise while Marvell falls in the same session, and it's also why the power, cooling, and networking suppliers behind the AI data-center buildout keep showing up in our free report on seven AI infrastructure stocks that aren't chipmakers.

Marvell stock still sits within striking distance of recent highs after a 196% year-to-date run through Thursday's close. The reaction reads as expectations management rather than a rejection of the AI thesis, which is why Broadcom's steady session matters as a cross-check.

Marvell's next quarterly report is approaching, and management commentary on custom XPU bookings and share-count guidance can reshape the tone quickly. Investors may want to size positions carefully here: the deal is strategically real, but the strike price puts a soft ceiling on upside until the market re-underwrites the share count. Traders could look for signs the dilution debate stabilizes before pressing new exposure on the way down.