Share prices of Marvell Technology (MRVL 2.18%) surged last week after the company reported strong fiscal fourth-quarter results and issued upbeat guidance. The stock has been very up and down over the past year, but this latest jump puts it up around 30% during that stretch.
The company is an AI infrastructure beneficiary as it provides networking chips, connectivity solutions, and storage controllers that are used to build and scale servers for artificial intelligence (AI) workloads. It also helps customers develop custom AI ASICs (application-specific integrated circuits). Amazon has been its biggest customer in this area; however, there has been speculation that it has lost its position as lead partner on future Trainium chip designs to the Taiwanese company AIchip.
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Microsoft is a newer large customer, as Marvell is helping in the development of its Maia chip, although there have also been rumors that it wants to shift to using Broadcom. Meanwhile, it said it has design wins with more than 20 customers.
Strong growth and projections
Overall, Marvell's fiscal Q4 revenue rose by 22% year over year to $2.22 billion. Data center revenue climbed 21% year over year in the quarter to $1.65 billion, while communication segment revenue jumped 26% to $567.4 million. Its adjusted earnings per share (EPS) increased from $0.60 a year ago to $0.80. Those results were slightly ahead of the midpoint of management's outlook for adjusted EPS of $0.79 on revenue of $2.2 billion.
Looking ahead, Marvell is projecting overall fiscal Q1 revenue to rise 27% to around $2.4 billion. It guided for adjusted EPS to be $0.79, up from $0.67 a year earlier. For fiscal 2027, it projected revenue to climb by more than 30% to around $11 billion. This was above its prior outlooks, as in September it guided for revenue of $9.5 billion and in December it boosted that mark to $10 billion. The growth is expected to be driven by its data center business, with it anticipating revenue to climb by 40%. Within that segment, its interconnect business is projected to jump by 50%.
Marvell expects its custom chip business to grow 20% this fiscal year and then to double in fiscal-year 2028. Overall, it is looking for fiscal 2028 revenue to accelerate to 40%, to nearly $15 billion.
NASDAQ: MRVL
Key Data Points
Is it too late to buy Marvell stock?
Marvell is a tougher stock to evaluate because of the lack of long-term clarity on its AI ASIC business. Questions remain about where it stands with Amazon for its custom chip business long term, and while Microsoft Maia is a big potential opportunity, the chip is still largely unproven, and thus, whether it has a big ramp-up in volume in fiscal 2028 is also a pretty big unknown.
That said, Marvell's networking connectivity business, particularly interconnects, is strong, so if it can hit its ASIC numbers, then the stock looks attractive here, trading at a forward price-to-earnings (P/E) ratio of 19 times fiscal 2028 analyst estimates. However, with the company appearing to be pretty aggressive with its fiscal 2028 forecast, I wouldn't chase the stock here.
