Marvell Technology (MRVL 0.32%) had a lot to prove in Friday's first-quarter report. The designer of storage and networking controller microchips had seen sales sliding lower every quarter since the end of 2014, but investors already embraced management's turnaround plans. Coming into the report, Marvell shares had gained 67% over the previous 52 weeks.

The results are in: Marvell finally broke its streak of sliding sales. Betting on real turnaround figures turned out to be a good play.

Microchip on a blue circuit board.

Image source: Getty Images.

Marvell's first quarter by the numbers

In the first quarter of fiscal year 2018, Marvell saw revenue rise 11.6% year over year to $579 million. That result landed in the upper half of Marvell's guidance for the quarter, and was achieved without sacrificing profit margins in a fire sale -- gross margin rose from 57.3% to 60.2%. On the bottom line, adjusted earnings jumped from $0.03 per diluted share in the year-ago quarter to $0.24.

As turnarounds go, this report showed a pretty sharp inflection point. All three of Marvell's core segments saw rising sales on a year-over-year basis, led by a 22% increase in storage revenues.

Looking ahead, Marvell's management set the midpoint of its second-quarter revenue guidance at $600 million along with adjusted earnings near $0.28 per diluted share. The sales target sits 4% below the second quarter of 2017, but earnings should rise by roughly 56%. Importantly, both targets were higher than Wall Street's current consensus estimates.

What's next?

Marvell's turnaround is hardly complete, but this report was a strong step in the right direction.

The company is a leader in solid-state storage controllers, with deep fingers in the enterprise storage and data center markets. In a conference call with analysts, Marvell CEO Matt Murphy noted that top-tier storage-device builders are placing large orders for his company's storage controllers these days, indicating solid trends in the end market for enterprise storage.

Looking further ahead, Marvell is attacking growth markets such as automotive computing with a combination of reliable data-storage solutions and low-power networking chips. Carmakers across Asia, Europe, and the U.S. have added Marvell networking to many models in development.

"While these wins are not projected to deliver meaningful revenue until fiscal 2019 and beyond, they do represent an important milestone in Marvell's progress in the automotive market," Murphy said. He added: "We're not quantifying any revenue yet, or sizes. But you can imagine we'll begin to talk more about that as we make progress toward these production ramps."

Marvell shares are trading at less than 21 times trailing earnings today, market-crushing price gains notwithstanding. It might be wise to use this stock as a safe on-ramp to investing in the booming automotive computing and enterprise storage sectors.