Shares of Marvell Technology (MRVL -18.60%) took a deep dive on Friday, following the chip designer's release of Q2 2025 earnings. The results were right in line with the consensus analyst projections, but that wasn't enough to impress Marvell's investors. The stock was down 16.1% at noon ET.
Marvell's Q2 by the numbers
Marvell's second-quarter sales soared 58% above the year-ago figure, landing at $2.01 billion. Adjusted earnings more than doubled from $0.30 to $0.67 per diluted share. As mentioned, the results matched Wall Street's average targets and the midpoint of management's guidance. No surprises there.
Looking ahead, however, Marvell's third-quarter revenue guidance fell just short of current analyst expectations. Top-line sales should hold almost exactly steady from the second quarter, representing a slower year-over-year increase of 36%.
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Lumpy sales are business as usual
Data center revenues have become the largest and fastest-growing part of Marvell's operations, contributing 74% of the second quarter's total revenues. That's up from 34% a year earlier. As a result, Marvell will reorganize its financial reporting in the third quarter, combining its four smaller segments into a single "communications and other" division.
As for the underwhelming revenue guidance, CEO Matt Murphy called Marvell's revenues "lumpy" in the conference call. Hyperscale customers often place massive bulk orders of networking and storage controllers to support new or upgraded data centers. The big buy is then followed by slower periods. That's what's going on here, with some of Marvell's core customers doing more planning than data center builds over the next few months.
So there's nothing terribly wrong with Marvell's business today. It's just a bit of a lull between periods of higher activity. The stock trades at 27.9 times trailing earnings right now, which is on the high side for Marvell, but also fairly reasonable for a company deeply involved in the artificial intelligence (AI) boom.
