Marvell Technology Inc. found it challenging to live up to the expectations set by Nvidia Corp., which reported unexpectedly high data-center sales. As a result, Marvell’s stock experienced a decline on Friday.
Marvell’s shares dropped by nearly 9% to an intraday low of $52.25 following the company’s earnings report. Although Marvell slightly surpassed earnings estimates and provided a forecast in line with expectations, the company’s data-center sales experienced a significant decline of 29%, amounting to $459.8 million for the latest quarter. Despite surpassing the FactSet consensus of $439.9 million, Marvell failed to replicate Nvidia’s impressive data-center sales, which were over $2 billion higher than anticipated.
TD Cowen analyst Matthew Ramsay noted that Marvell’s report was in line with expectations, considering the upsides driven by artificial intelligence but offset by weaknesses in other segments. However, Ramsay acknowledged that investors were still longing for stronger numbers, especially after being captivated by Nvidia’s remarkable results. He acknowledged that Marvell may not be on par with Nvidia but emphasized that no one else is. Ramsay gave Marvell an outperform rating and set a price target of $65.
Mizuho desk analyst Jordan Klein highlighted that even though Marvell’s forecast fell short of expectations, AI sales remained larger than anticipated.
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Marvell Exceeds Expectations in AI Sales, Raises Revenue Forecast
Marvell, a tech company known for its semiconductor products, has surpassed market expectations with its AI sales and increased its revenue forecast. Analysts are optimistic about Marvell’s prospects in the AI industry.
Strong AI Revenue Boosts Marvell’s Performance
According to industry experts, Marvell’s better-than-expected AI revenue has been a key positive for the company. It is projected that Marvell’s AI sales could reach $800 million by the end of this year, exceeding previous estimates.
Marvell’s acquisition of Inphi in 2020 has significantly contributed to the company’s success. The star performer has been Inphi’s PAM4 digital signal processors, widely used in cloud data centers.
Upgraded Forecasts Reflect Marvell’s Confidence
Christopher Rolland, an analyst from Susquehanna Financial, praises Marvell’s AI performance and suggests that the company’s revenue forecast should be revised upward. Initially estimated at $400 million, the forecast is now expected to surpass $550 million this year. Quarterly projections indicate an exit rate of around $200 million, indicating that the $800 million estimate for the following year was too conservative.
Rolland has given Marvell a positive rating and set a price target of $70 for its shares.
Market Outlook and Analyst Recommendations
Out of the 30 analysts covering Marvell, 27 have given it a buy rating, while three have rated it as a hold. Among them, seven analysts have raised their price targets, resulting in an average target of $70.94, slightly higher than the previous target of $70.27 (according to FactSet data).
Solid Performance despite Market Volatility
Despite a recent selloff in the market, Marvell’s shares have shown resilience. Year-to-date, the company’s stock has experienced a remarkable 44% increase, outperforming the PHLX Semiconductor Index (SOX) with its 37% gain, as well as the S&P 500 (SPX) and the tech-heavy Nasdaq Composite (COMP), which saw gains of 14% and 29%, respectively.
Marvell’s impressive performance in the AI sector, coupled with positive market sentiment, positions the company well for future growth and success.