Alphabet’s (NASDAQ: GOOG)(NASDAQ: GOOGL) Google unit has secured a warrant covering 58,970,907 shares of Marvell Technology (NASDAQ: MRVL), roughly 7% of the chipmaker, at a fixed exercise price of $206.58 per share.
The agreement, signed on July 29, covers artificial intelligence inference accelerators, storage controllers, and other silicon built around Google’s in-house TPU chips, marking a significant expansion of Google’s custom chip relationships.
Marvell shares jumped approximately 10% on Wednesday following the disclosure, closing near $237, putting the full warrant package already worth about $2.1 billion more than its exercise cost.
The warrant structure means Google is not merely buying chips from a supplier but has negotiated the right to profit directly from its supplier’s equity while spending on those products.
Most of the warrant shares, specifically 57,610,040 of them, vest in stages as Google’s qualifying purchases accumulate, with one block unlocking for every $500 million spent on the covered products.
A smaller tranche of 1,360,867 shares vests on a fixed schedule over the first year regardless of purchase activity, offering Google guaranteed equity from the outset.
Crucially, Google’s purchases are entirely discretionary under the agreement, meaning nothing in the deal obligates the company to spend a single dollar on Marvell’s products.
Exercising the full warrant would cost approximately $12.2 billion, while collecting every performance-based share requires $120 billion of qualifying purchases by January 29, 2033.
For context, Alphabet spent $44.9 billion on capital expenditures in the second quarter alone, roughly double the year-ago figure, and $132 billion over the trailing 12 months, making the spending threshold achievable in under three quarters at current pace.
This arrangement is not entirely without precedent in the AI chip industry, as AMD (NASDAQ: AMD) announced a similar structure in October 2025 when it issued OpenAI a warrant for up to 160 million AMD shares, about 10% of the company, with an exercise price of just one cent per share.
The Google-Marvell version carries a real exercise price and lacks gigawatt deployment commitments, making it a more conventional structure, though the fundamental dynamic is the same.
The biggest buyers of AI silicon have effectively begun charging their suppliers in equity for the privilege of winning their business, reflecting where leverage now sits in the broader AI infrastructure buildout.
Google has not granted Marvell exclusivity in return, as Broadcom remains its primary TPU design partner under a long-term agreement announced in April covering future TPU generations with component supply running through as late as 2031.
The dilution cost of the warrant does not fall on Google but on Marvell’s existing shareholders, whose ownership is reduced by approximately 7% if the warrant fully vests and converts.
Alphabet’s second quarter results already demonstrated the power of equity holdings on its financials, with other income including a net gain of $98.0 billion driven primarily by unrealized gains on equity securities, helping push earnings per share to $9.11, nearly quadrupling year over year.
Total revenue for the second quarter reached $119.8 billion, up 24% year over year, with operating income rising 30%, making it a strong quarter even before the equity gains were factored in.
Any Marvell shares acquired through the warrant would land in the same equity securities bucket, adding incremental upside to chip spending that was likely to occur regardless of the warrant’s existence.
