Semiconductor companies have a long track record of delivering shareholder returns, and that is certainly the case with Marvell Technology (MRVL -0.76%). The company has existed since 2005, and has spent most of its history being best known for producing chips in the telecom and consumer sectors.
Today, thanks to artificial intelligence (AI), the company's custom ASICs (application-specific integrated circuits) have become a more critical focus. As it has benefited, a revenue growth pause that is likely temporary sent its stock plunging earlier this year. Despite that hiccup, it appears ready for a massive comeback. Here's why.
Image source: Getty Images.
Marvell's custom ASICs
Marvell has traditionally offered products for networking, interconnects, and storage purposes. It has garnered increased investor attention, particularly since 2023, with ASICs that focus on AI and data centers. These combine cutting-edge IP with multi-chip packaging and what it touts as the most advanced process technologies in its industry.
Marvell's ASICs support chips ranging from 14nm to as small as 3nm, as well as custom AI accelerators. It also runs these applications, keeping power use in mind, and employing comprehensive testing methodologies.
Additionally, in May of this year, it began partnering with Nvidia to support NVLink Fusion technology. This technology will integrate NVLink connectivity with rack-scale hardware, software, and Marvell's custom silicon to give customers more flexibility and choice with next-generation AI infrastructure.
Effects on financials
Unsurprisingly, its custom ASICs have helped spark considerable amounts of growth. In the first half of fiscal 2026 (ended Aug. 2), the $3.9 billion it earned in revenue increased by an astounding 60% compared to the same period in fiscal 2025.
Investors should note that revenue was just under $1.9 billion in fiscal Q1 and about $2.0 billion in fiscal Q2, implying a 6% quarter-over-quarter increase. This shows that while growth is still rapid, it is inconsistent.
Nonetheless, that increase was still sufficient to turn operating income positive, and with that, it earned a positive net income in each quarter. For the fiscal year's first half, the company earned $373 million, far above the $409 million loss in the previous year.
Moreover, the nearly $2.1 billion in revenue Marvell has forecast at the midpoint will amount to a 36% yearly increase if that prediction holds. Although that would represent some slowing, it should continue its rapid pace of growth for the immediate future.
Despite that performance, Marvell's stock is down for 2025. Like most tech stocks, Marvell sold off significantly at the beginning of the year, with the low point coming just after "Liberation Day." A slight revenue miss in August also interrupted the stock's recovery temporarily, though the stock now trades at its highest point since March.
Investors should also note its valuation. Its profitability is too recent to measure its valuation by its P/E ratio, but a forward P/E ratio of 32 makes Marvell appear quite reasonable. Also, the price-to-sales (P/S) ratio of 11 appears relatively cheap when considering it was 20 as recently as February. Between these multiples and the revenue growth rate, investors could have a massive opportunity in Marvell stock.
Consider Marvell stock
Given Marvell's role in the AI industry and the state of its stock, Marvell appears to be on the path to a massive comeback.
Admittedly, a recent revenue miss and the volatile nature of its revenue growth may disappoint some investors.
Even its detractors cannot deny the rapidly growing demand for its custom ASICs. Thanks to the doubts about its business, investors can buy the stock at a discounted price and a reasonable valuation. Amid these conditions, investors might want to consider buying Marvell while it is still in the bargain bin.
