The broader market sell-off has sent Marvell Technology (MRVL 1.55%) stock packing in 2022, with shares of the chipmaker down 31.1% so far this year. When you look at Marvell's results for the fourth quarter of fiscal 2022 (released on March 3), however, you see indications that the stock's pullback might just be a buying opportunity given the pace at which the company is growing.
Marvell's revenue and earnings cruised past Wall Street's expectations thanks to the terrific growth in its top and bottom lines. The company's guidance was also better than expected on account of the robust demand for its chips, which are used in multiple fast-growing markets such as data centers, cloud computing, 5G wireless networks, enterprise networking, and automotive.
Let's take a closer look at Marvell's quarterly report and check why buying this tech stock is a no-brainer right now.
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Multiple catalysts are driving terrific growth at Marvell Technology
Marvell Technology reported $1.34 billion in revenue for the fourth quarter of fiscal 2022, an increase of 68% over the prior-year period. Adjusted net income increased to $0.50 per share from $0.29 per share in the year-ago period. The numbers exceeded Wall Street's expectation of $0.48 per share in earnings on revenue of $1.32 billion.
Marvell's outstanding year-over-year growth was driven by solid showings across all five of its end markets. Additionally, the acquisitions of Inphi and Innovium that were completed during the fiscal year gave Marvell's business a big boost, though CEO Matt Murphy said on the latest earnings conference call that its organic growth remained strong as well.
The data center business was Marvell's primary growth driver last quarter, as it produced 43% of total revenue. The segment's revenue more than doubled year over year to $574 million from $269 million in the prior-year period. Innovium and Inphi's relationships with data center customers played a key role in the data center business' growth, along with the fact that Marvell now has a stronger product portfolio to attract new customers.
Not surprisingly, Murphy remarked on the conference call that the company is "engaged with multiple additional customers and are looking forward to further expanding our footprint in this fast-growing market." The data center business generated $1.78 billion in revenue for Marvell last fiscal year, and the company sees strong acceleration in this segment on the back of new design wins.
More specifically, new design wins are expected to increase Marvell's data center revenue by $400 million in fiscal 2024, followed by $800 million in incremental revenue in fiscal 2025.
The 5G infrastructure market is turning out to be another tailwind for Marvell Technology, driving impressive growth in the company's carrier infrastructure business, which produced 18% of its top line last quarter. The segment's revenue was up 45% year over year on the back of an increase in 5G rollouts and the ramp-up of its products at multiple base station customers.
Marvell's 5G business should be able to sustain its strong momentum in the long run, as global 5G coverage is expected to hit 75% by 2027, compared to just 15% in 2020. Meanwhile, the 5G base station market is expected to clock a compound annual growth rate of 37% through 2030. What's more, Marvell's partnerships with major 5G infrastructure providers should help it take advantage of the secular growth opportunity in this space.
The solid growth momentum is here to stay
Marvell Technology's guidance makes it clear that the company's impressive pace of growth is sustainable. It anticipates $1.42 billion in revenue this quarter, along with adjusted earnings of $0.51 per share. Those numbers point toward big gains from the prior-year period's revenue of $832 million and earnings of $0.29 per share. More specifically, Marvell's revenue could increase 71% year over year at the midpoint of its guidance range, while earnings could increase 76%.
For the full year, analysts expect Marvell's revenue to increase nearly 50%, followed by a 32% increase next year. What's more, the company's earnings are expected to increase at an annual rate of 43% for the next five years.
Marvell stock is trading at 11.3 times sales as compared to its 2021 average price-to-sales ratio of 16.8. The company's forward earnings multiple of 28 is also lower than last year's average of 38. So investors looking to buy a growth stock are getting Marvell Technology at an attractive valuation, and the massive pace of growth that it could clock in the long run makes buying this chipmaker a no-brainer right now.
