Reports emerged this week that Alphabet struck a sweeping custom-chip deal with Marvell Technology, handing Google warrants to buy up to $12.2 billion worth of Marvell stock — roughly 7% of the chipmaker — while simultaneously reshaping the competitive map of AI semiconductor supply. GOOGL shares barely moved, dipping about 0.6% , but the ripple effects across the chip sector tell a bigger story about how Google is spending its way through an unprecedented infrastructure buildout.
Google Is Buying Itself a Second Chip Supplier — and a Discount for Doing It
Google received the right to buy up to 58.97 million Marvell shares at $206.58 apiece, exercisable until August 2033. But this isn't a blank check. The bulk of the shares vest in 240 equal tranches, with one tranche unlocking for every $500 million in custom-product revenue Google generates through Marvell. In plain terms: Google earns equity by spending. For Alphabet, it reduces reliance on a single supplier and helps manage costs as AI workloads explode.
Broadcom's Decade-Long Grip on Google Is Loosening
Over the last decade, Google has largely collaborated with Broadcom on custom chips. That relationship was expanded just this April. Now, Marvell shares rose as much as 14% after the announcement, while Broadcom slid as much as 5.8%.
Broadcom currently holds more than 70% of the custom AI chip market and has forecast $100 billion in AI chip revenue by 2027. Markets read the deal as a zero-sum share shift — bad news for the incumbent.
The Numbers Behind Google's Insatiable Chip Appetite
Alphabet raised its 2026 capex guidance to between $195 billion and $205 billion , nearly double what it spent on infrastructure in 2025.
Cloud revenue hit $24.8 billion in Q2 2026, an 82% year-over-year gain , which helps justify the outlay. But a $5.9 billion cash burn in Q2 underscores the tension: revenue is surging, yet spending is surging faster.
What This Means for GOOGL Shareholders The Marvell warrant costs Alphabet nothing upfront — it's a reward for buying chips, not an additional expense. Alphabet is projected to earn roughly $3 billion from TPU-related infrastructure this year and $25 billion by 2027. If that ramp holds, locking in a second supplier at favorable economics while earning an appreciating equity stake looks like disciplined procurement. The risk? That $200 billion in annual capex produces returns slower than Wall Street's patience allows.