Shares of chip-maker Marvell Technology (MRVL 3.17%) were sliding today after the company delivered results in line with expectations but offered weaker-than-expected guidance for the first quarter.
Marvell, which specializes in networking and storage solutions, is expected to benefit from the boom in AI, but high expectations were already baked into the stock after shares had doubled over the last year coming into the report.
As of 1:07 p.m. ET, the stock was down 10.1% on the news.
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Marvell falls short of expectations
Marvell is still sensitive to the overall chip cycle, which is just starting to return to growth after an earlier slump, and revenue in the quarter rose just 1% to $1.43 billion, which edged out guidance at $1.42 billion.
Like the rest of the semiconductor industry, Marvell saw strong growth in the data-center segment, where revenue jumped 54% to $765.3 million, though revenue in every other category fell double digits, including enterprise networking, carrier infrastructure, consumer, and automotive/industrial.
Gross margin in the quarter declined from 47.5% to 46.5%, and generally accepted accounting principles (GAAP) operating expenses rose as well, which included increased stock-based compensation and a $26 million restructuring charge. On an adjusted basis, earnings per share were flat at $0.46, which matched expectations.
CEO Matt Murphy said, "AI drove strong growth in our data center end market revenue," adding, "as a critical enabler of accelerated infrastructure for AI, Marvell is well-positioned to capitalize on this massive technology inflection."
What's next for Marvell
Marvell expects demand to continue to grow in the data-center segment, driven by AI shipments, but overall guidance disappointed as it still sees weakness in other segments.
For the first quarter, the company expects revenue of $1.15 billion +/- 5%, which was short of the consensus at $1.37 billion, and adjusted earnings per share of $0.18 to $0.28, missing estimates at $0.40.
That guidance explains why the stock is down today. While Marvell is benefiting from the AI boom, it will take time for the rest of the business to return to growth. After the stock's gains over the last year, investors will have to be patient.
