Key Highlights

  • Q2 FY27 Revenue rose 37% to a record $2.739 billion, with Data Center revenue up 46% to $2.171 billion, or 79% of sales.
  • Marvell guided Q3 FY27 revenue to $3.15 billion, plus or minus 5%, though shares fell after the report over the timing of Google-related revenue.
  • Marvell announced 2nm optical interconnect demonstrations at ECOC 2026 on September 21, including 400G-per-lane PAM4 and 800G ZR/ZR+.
  • Shares have risen about 185% year to date through late August, closing at $262.36 on September 22, above post-earnings lows but below the 52-week high of $329.88.

Marvell Technology (NASDAQ:MRVL) grew data center revenue 46% year over year to a record $2.171 billion in the second quarter of fiscal 2027. That segment is now about four-fifths of the company's sales. In its August 27 results release, the Santa Clara, California-based chipmaker reported total revenue of $2.739 billion, also a record and up 37% from a year earlier. The gain came mainly from custom AI silicon and the electro-optical interconnect products that link accelerators and servers inside hyperscale data centers.

Marvell also guided third-quarter revenue to $3.15 billion, plus or minus 5%, which would be another sharp sequential increase. "AI-related bookings remain exceptionally robust, and we expect our revenue growth to accelerate further through the remainder of fiscal 2027," Chairman and Chief Executive Officer Matt Murphy said in the release.

The record quarter did not lift the stock right away. Shares fell 7% to 8% in early trading on August 28. Investors focused on the timing of revenue from an expanded Google (NASDAQ:GOOGL) Partnership rather than the beat itself. Since then, the company has kept its data center story in view with a set of 2nm optical demonstrations at the European Conference on Optical Communication (ECOC) in September.

Inside the Record Second Quarter

Data center revenue of $2.171 billion made up 79% of the total, the release showed. The communications and other segment, which covers enterprise networking, carrier infrastructure, consumer and automotive/industrial, contributed $567.8 million, up 10% year over year. GAAP gross Margin was 53.1% and non-GAAP gross margin was 58.9%. GAAP diluted EPS was $0.33 and non-GAAP diluted EPS was $0.94. Operating Cash Flow was $605.5 million, and Marvell spent $200 million on share repurchases and $53.9 million on dividends during the quarter.

For the third quarter, the company guided GAAP gross margin to 52.9% to 53.9% and non-GAAP gross margin to 57.5% to 58.5%. Its GAAP diluted EPS guide was $0.53 and its non-GAAP guide was $1.10, each plus or minus $0.05. Management also raised its fiscal 2027 revenue outlook to about $12 billion from $11.5 billion, and its fiscal 2028 outlook to about $18 billion from $16.5 billion.

Why the Stock Slipped Despite the Beat

Before the report, Marvell shares had risen about 185% year to date. The stock closed at $241.42 on August 27 and fell to about $224 in after-hours trading. The main issue was timing: the major financial impact of the Google agreement is expected in fiscal 2029 and beyond, later than some investors had hoped. The lower third-quarter gross margin guide also reflected a roughly 90 basis point sequential decline from a heavier mix of lower-margin custom silicon.

The Google Deal and Custom Silicon

The Google agreement is the largest single development in Marvell's recent history. The company disclosed an expanded commercial agreement on August 19 to develop custom semiconductor products for programs attached to Google's TPU ecosystem. According to Marvell's SEC filing, these cover AI inference accelerators, storage controllers, network interface controllers, memory interface controllers and near-memory compute. As part of the deal, Marvell issued Google a Warrant to buy about 59 million shares at $206.58 each, worth about $12.2 billion. The warrant vests in 240 tranches, one for each $500 million of cumulative custom product revenue from the third quarter of fiscal 2027 through fiscal 2033, implying a ceiling of about $120 billion in qualifying revenue. That figure is an upper limit tied to vesting, not a purchase commitment.

2nm Optics Take the Stage at ECOC

On September 21, Marvell announced what it called industry-first 2nm optical interconnect demonstrations at ECOC 2026, held September 20 to 24 in Malaga, Spain. According to the company's release, they include a 2nm 400G-per-lane optical PAM4 demonstration aimed at 3.2T data center links and a 2nm 800G ZR/ZR+ pluggable with integrated MACsec security, powered by its Libra coherent DSP. They also include 2nm 1.6T ZR and coherent-lite O-band technologies, and a 102.4-terabit co-packaged optics platform using 200G-per-lane silicon photonics. Marvell said it is showing 38 demonstrations in total.

"AI data center operators need optical interconnect technologies that deliver higher bandwidth, lower power and greater security," Xi Wang, senior vice president and general manager of the Connectivity Business Unit, said in the release. The stock rose about 2% that day. On September 22 it closed at $262.36, above the post-earnings lows but below its 52-week high of $329.88.

Competition in AI Networking and Custom Chips

Marvell competes with Broadcom (NASDAQ:AVGO) for custom AI accelerator and networking work at the largest cloud providers. In optical DSPs and interconnect, it also faces competition from companies building co-packaged optics and pluggable modules. Qualcomm (NASDAQ:QCOM), which demonstrated its own optical die-to-die interconnect at ECOC with Lumentum (NASDAQ:LITE) and Corning (NYSE:GLW), has signaled growing ambitions in data center silicon. The shift to 1.6T and 3.2T optical links is a key battleground, because bandwidth between accelerators increasingly limits AI cluster performance.

Risks to the Growth Story

Customer concentration is significant: a small number of hyperscalers drive most of the data center segment, and the Google warrant links part of Marvell's upside to a single customer's spending. Custom silicon also carries lower margins than merchant products, as the third-quarter gross margin guide shows. Much of the Google revenue is not expected until fiscal 2029 or later, which leaves the stock exposed to delays or changes in customers' AI Capital spending plans. Valuation after a steep run-up, export restrictions and the non-data-center businesses, which grew only 10% last quarter, are further considerations.

Marvell's Next Milestones to Track

The next major catalyst is Marvell's fiscal third-quarter report, where investors will judge performance against the $3.15 billion revenue guide and the raised fiscal 2027 and 2028 outlooks. The company had not announced a date for that report. Customer design-win updates, progress on Google programs, and adoption of the 2nm optical DSPs shown at ECOC are other items to watch. Analysts tracking the stock rate it a Strong Buy on a consensus basis, with an average 12-month price target of $289.04.