Reports Of An Amazon Deal Are Driving Marvell Technology Shares Higher: What's Going On?

Marvell Technology Inc MRVL shares are trading higher Wednesday following an unconfirmed report suggesting the company inked a deal with Amazon.com Inc AMZN.

What Happened: According to a Liberty Times Net report, Marvell is set to receive an order from Amazon for second-gen AI chips.

The report indicates that the company is expected to start working on the design of the chip in the second half of the year and the chip is expected to be ready for mass production sometime next year.

Shortly after the stock surged, Wedbush released a new note, raising questions about the report. 

"We would point out some inconsistencies in the reporting. Most notably, whereas Liberty Times suggests Marvell is working with Amazon on a 2nd generation Inference chip, Amazon began offering private instances using Inferentia 2 late last year and so would be working on a 3rd (not 2nd) generation inference chip at this point," Wedbush analyst Matt Bryson said. 

The analyst also noted that Amazon's Annapurna operation was founded by individuals with close ties to Marvell. 

Although Bryson can't "decisively" say whether or not Marvell is working with Amazon on an AI chip project, he suggested that more work needs to be done before investors come to conclusions. 

The semiconductor sector has rallied this year on the back of accelerated development of large language models (LLMs), which are powered by advanced chips. Marvell shares are up nearly 60% year-to-date and more than 45% over just the last month.

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MRVL Price Action: Marvell shares were up more than 6% in early trading before pulling back. The stock was up 1.65% at at $60.12 at the time of writing, per Benzinga Pro.

Photo: courtesy of Marvell Technology.