Nvidia (NVDA +4.32%) is a leading player in the artificial intelligence (AI) chip market. But its chips are expensive, and more and more, investors are hearing about tech companies making their own chips or going the route of custom AI chips that are more specialized and cheaper. Marvell Technology (MRVL 0.79%) is one of those custom chipmakers.
Recently, the two companies announced they will be working together, with Nvidia also investing in Marvell. It could open up some significant growth opportunities for Marvell, which is already projecting some impressive growth in the next few years. Has the AI stock become a no-brainer buy on this news?
Image source: Getty Images.
What the partnership means for both companies
Nvidia has recently announced that it will be investing $2 billion in Marvell. The goal is to make it easier for customers to utilize Marvell AI chips that can still be used with Nvidia's infrastructure, including its central processors. The move effectively expands Nvidia's ecosystem. It's good news for Nvidia as it broadens its growth opportunities in the custom chip market, and for Marvell, it'll do the same, as it means the company's products will be compatible with Nvidia data centers.
NASDAQ: NVDA
Key Data Points
The partnership will be a terrific opportunity for both companies, particularly as hyperscalers continue to spend heavily on AI infrastructure in the years ahead. Marvell recently reported strong fourth-quarter earnings for fiscal 2026 (which ended Jan. 31), with its top line rising 22% to $2.2 billion. Full-year revenue was $8.2 billion, and Marvell expects it could reach $15 billion by fiscal 2028.
Marvell's stock could have plenty of upside
Partnering with Nvidia is an excellent move for Marvell, as it ensures the company's chips are compatible with the tech giant's data centers, giving customers flexibility as to which chips to use. At $87 billion in market cap, Marvell isn't a small company, but it is still smaller in size than the big players in AI right now. For investors looking to profit from AI growth opportunities, Marvell could be one of the better stocks to buy for the long term.
NASDAQ: MRVL
Key Data Points
In the past 12 months, Marvell's stock has risen by around 60%. And with a bright future ahead, it may rise even higher. It's currently trading at a forward price-to-earnings multiple of around 26 (which is based on analyst expectations), and that isn't too high, as the S&P 500 average is roughly 24. It's not a terribly expensive stock when factoring in its growth potential, and the partnership with Nvidia makes Marvell an even better buy.
