Marvell Technology (MRVL -10.28%) stock tumbled 8% through 10:55 a.m. ET Friday despite beating on both top and bottom lines in its fiscal Q2 2027 earnings report last night.
Heading into the report, Wall Street forecast Marvell to earn $0.93 per share on sales of $2.71 billion. Marvell actually earned $0.94 per share on sales of $2.74 billion, eking out wins on both counts.
Image source: Getty Images.
Marvell Q2 earnings
Admittedly, the "$0.94" profit Marvell earned in Q2 was a non-GAAP number. Earnings calculated under generally accepted accounting principles (GAAP) were only $0.33 per share. Still, that resulted in a 50% increase in GAAP profit year over year. Sales grew 37% year over year.
Free cash flow for the quarter -- cash from operations minus the cost of capital spending and technology licenses -- amounted to $474.3 million, a more modest 15% increase versus fiscal Q2 2026 -- but 54% more cash profit than reflected in the GAAP earnings number.
NASDAQ: MRVL
Key Data Points
What's next for Marvell Technology stock?
Guidance was pretty great, too. Forecasting $3.15 billion in fiscal Q3 2027 sales, improved gross profit margins (about 53.4%), GAAP profits of about $0.53 per share, and non-GAAP earnings of about $1.10 per share, Marvell met or exceeded analyst forecasts on all counts.
So... why aren't investors more impressed with Marvell's performance?
Valuation is the most obvious answer. On the one hand, Marvell's growing nicely at 15%, 37%, or 50% -- depending on your frame of reference. On the other hand, though, the stock costs a pretty staggering 84x trailing earnings today, resulting in a PEG ratio well above the value investor's touchstone of 1.0.
Merely terrific earnings may not be good enough to support such a high valuation on Marvell stock.
And Marvell stock's next move may be down.
