Marvell's stock price surged! Wells Fargo stated that potential orders from Google represent a significant incremental benefit, maintaining a target price of $135

According to the Zhitong Finance APP, Google (GOOGL.US) is in deep discussions with Marvell Technology (MRVL.US) to develop two new types of artificial intelligence chips. Stimulated by this positive news, Marvell's stock price soared over 5%, although neither party has officially commented on the report. In stark contrast, the stock prices of Google's current long-term partner Broadcom (AVGO.US) and its foundry Tianhong Technology (CLS.US) experienced a slight pullback.

According to disclosed details, the core of the discussions revolves around two new chips aimed at significantly enhancing the operational efficiency of AI models. The first is a critical "Memory Processing Unit" (MPU), designed to work in conjunction with Google's existing Tensor Processing Units (TPUs) to address memory bottlenecks in AI computations; the second is a next-generation TPU optimized specifically for handling AI inference workloads.

The report indicates that both parties aim to complete the design of the MPU and initiate test production before 2027, which means Google is accelerating the construction of a more cost-effective vertically integrated hardware system to counter NVIDIA's dominance in the GPU sector.

Wells Fargo analyst Aaron Rakers noted in his latest research report that if the deal with Google is finalized, it will become a "meaningful incremental positive factor" for Marvell. Rakers specifically emphasized that Marvell's advantage in this bidding process primarily stems from its recently launched Structera CXL solution. In his client report, he stated that the potential MPU order may reflect Marvell's technical strength in Structera CXL, which significantly enhances computing efficiency in large-scale data centers through rack-level memory pooling.

Currently, Marvell's custom XPU business has covered giants like Amazon and Microsoft, and Google's involvement will significantly enhance its customer diversification capability. Rakers maintains an "overweight" rating on Marvell with a target price of $135.

Rakers added, "In our meeting, CEO Matt Murphy emphasized that the company's Structera CXL solution has secured design orders from three large-scale data centers, focusing on utilizing CXL pooling technology to integrate existing memory capacity in their computing infrastructure. At the OFC exhibition in mid-March, Marvell launched the Structera S 30260—a new 260-channel CXL switch that enables rack-level memory pooling and works in conjunction with the company's Structera A near-memory accelerator, Structera X memory expansion controller, and Alaska PCIe/CXL retimer."

Despite the market's high spirits, industry analysts also pointed out that Google's move is more of a "supply diversification" strategy rather than a complete replacement of existing partners. Just days before this news broke, Broadcom had secured a long-term design agreement with Google extending to 2031. The introduction of Marvell reflects Google's efforts to finely reduce costs for specific "inference" segments, striving to make its TPU a more competitive general-purpose platform in the industry According to estimates from Investors.com, as Google plans to license its TPU IP to companies like Anthropic and Meta, its TPU business is expected to contribute over $10 billion in high-margin licensing revenue by 2027, and Marvell is clearly trying to get a piece of this rapidly growing pie