Marvell Technology (MRVL +2.35%) shares are down 37% from their prior high as investors have sold off artificial intelligence (AI)-linked stocks and grown more cautious about aggressive AI infrastructure spending.
Despite the negative market sentiment, this pullback looks more like an opportunity than a warning sign. The decline sits in sharp contrast to Marvell's recent 28% year-over-year revenue growth and management's long-term outlook for demand across data center interconnects, switches, and custom chip solutions.
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Strong demand for data center components
Marvell is aiming to be a core networking supplier for AI data centers. Its optical interconnects and advanced Ethernet switches enable massive data throughput at high speeds -- an essential requirement for AI workloads. As models grow larger and more capable, the pressure on networking and bandwidth should only increase.
That demand is already showing up in results and guidance. Management's full-year outlook now calls for total revenue growth of 40% year over year to $11.5 billion. Data center revenue, in particular, is expected to climb about 50% in fiscal 2027 and then accelerate to roughly 55% in fiscal 2028.
Investors can also see the push toward faster, lower-latency processing in Marvell's scale-up optics roadmap, including near-packaged optics (NPO) and co-packaged optics (CPO). Revenue for these products was previously projected to reach $150 million next fiscal year, but that forecast has doubled to $300 million as customers prioritize latency reduction and higher performance.
In other words, Marvell's accelerating data center growth suggests AI infrastructure investment is still moving forward -- even as the stock now trades at a discount.
NASDAQ: MRVL
Key Data Points
Valuation and growth expectations
At first glance, the stock's forward price-to-earnings (P/E) multiple of roughly 52 looks expensive. But analysts expect earnings to grow about 37% annually over the next several years, supported by management's view that surging data center revenue can push operating margins toward the upper end of its 38% to 40% target through fiscal 2028.
Nvidia CEO Jensen Huang recently called Marvell the "next trillion-dollar company," implying significant upside from today's roughly $183 billion market capitalization. I wouldn't expect the stock to get there anytime soon. However, Huang's comment highlighted Marvell's increasing value in the AI supply chain, particularly the growing need for faster data center connections to support more sophisticated AI models.
Still, the recent sell-off is a reminder of the risks. If data center spending slows meaningfully, the stock could drop further. But for long-term investors, the pullback offers an attractive entry point. The key tailwind remains the same: As new AI models gain stronger reasoning capabilities and broader adoption, the need for higher-bandwidth data processing should continue to rise. That plays directly into Marvell's strengths.
