Key Points
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Marvell issued Google a warrant for 58,970,907 shares, equating to about 7% of the company, at an exercise price of $206.58.
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The shares will vest as Google makes discretionary chip purchases, with one block for every $500 million spent.
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Alphabet’s second-quarter results showed a $98 billion net gain, driven mainly by unrealized gains on equity securities.
Google, owned by Alphabet (NASDAQ:GOOG, GOOGL), expanded its custom chip collaborations in July 2023 through an agreement with Marvell Technology (NASDAQ:MRVL). This includes developing AI inference accelerators and storage controllers built on Google’s TPU chips. Following the announcement, Marvell shares increased by approximately 10% to nearly $237.
The warrant, which could cost Google around $12.2 billion to fully exercise, does not obligate Google to make any purchases. Instead, for every $500 million spent on Marvell’s products, Google will gain additional stock at a fixed price, making the offering particularly favorable for Google.
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