Chipmaker Marvell Technology Inc. beat expectations and posted guidance that came in just above Wall Street’s estimates, but it wasn’t enough to impress investors, and its stock was headed south in after-hours trading.

The company, which designs custom artificial intelligence processors as well as standard chips and optical networking technology, has emerged as a major beneficiary of the AI boom this year. But with rising fears that the AI market could be entering bubble territory, it’s likely that investors were looking for a much bigger earnings beat.

Instead, Marvell only just edged past the market’s expectations. It delivered adjusted second-quarter earnings of 94 cents per share, barely ahead of the Street’s target of 93 cents. Revenue for the period rose 37% from a year earlier to $2.74 billion, ahead of the $2.72 billion target. All told, the company’s net income rose to $308 million, up from $194.8 million in the same period last year.

Marvell’s guidance for the current period was a bit better. The chipmaker said it’s looking for third-quarter earnings of $1.05 to $1.15 per share on revenue of around $3.15 billion at the midpoint of its range. Wall Street is looking for earnings of $1.08 per share on sales of $3.04 billion. Marvell’s stock fell more than 7% after-hours as investors digested the company’s latest results. However, the stock is still up 184% in the year to date, and 222% over the last 12 months.

Last week, Marvel’s stock was boosted when it revealed that it had granted Google LLC a warrant to purchase $12.2 billion worth of shares in the company, as part of a larger commercial chip deal. Marvel has been a longstanding partner of Google’s, helping it design aspects of its tensor processing units, which are used to run AI workloads in the cloud. They’re an alternative to Nvidia Corp.’s graphics processing units. Marvell said the expanded deal could bring in revenue of $120 billion through fiscal 2033.

“The warrant structure reflects the scale and long-term potential of the relationship,” Marvell Chief Executive Matt Murphy (pictured) said on a conference call with analysts.

The chipmaker raised its guidance for fiscal 2028, saying it now projects revenue of $18 billion that year, up from $16.5 billion in its previous estimate. But on the call, some analysts wanted to know why the Google deal wouldn’t be contributing more revenue that year. Murphy told them that the company’s custom revenue targets already do reflect some of that revenue, but added that the deal would have a much more significant impact in fiscal 2029.

According to Murphy, Marvell’s custom chip revenue is expected to be more than double next year. He added that there was “upside bias” to its previous $10 billion-plus fiscal 2029 target, but declined to offer a new number, saying he would reveal more at the company’s annual investor day, set to take place on Oct. 6.

Photo: Marvell Technology