Despite the artificial intelligence (AI) boom lifting giants like Nvidia (NVDA), not every chip stock has been able to keep up, and one such example is Marvell Technology (MRVL). The company designs application-specific integrated circuits (ASICs) that power hyperscale data centers, offering custom, cost-efficient solutions for targeted AI workloads, in contrast to Nvidia’s GPUs, which are built for broader, more general-purpose computing.
After a tough 2024, this year has been even more punishing for Marvell, with shares sliding by double digits due to a mix of sector-wide turbulence and company-specific setbacks. A broader tech selloff tied to trade tensions and slowing global growth piled on early pressure, leaving investors hesitant despite Marvell’s positioning in the AI supply chain.
Concerns have also emerged that the company may miss out on designing Amazon’s (AMZN) next-generation Trainium AI chips, raising questions about its competitive position in the fast-moving AI market. Moreover, the volatility has persisted even after Marvell beat expectations in its most recent earnings release. That said, as the company gears up to release its fiscal 2026 Q2 earnings report on Aug. 28, here is a fresh look at this struggling chipmaker.
Through close collaboration and transparency with its customers, Marvell has been shaping the next generation of enterprise, cloud, automotive, and carrier infrastructure. For over 30 years, the company’s semiconductor solutions have enabled the world’s data to be moved, stored, processed, and secured, meeting today’s demands while paving the way for tomorrow’s technologies.
Earlier in August, Marvell completed the sale of its Automotive Ethernet business to Infineon Technologies for $2.5 billion in an all-cash deal. The unit had been expected to generate between $225 million and $250 million in revenue during fiscal 2026, but with the divestiture now finalized, its contribution to Marvell’s results going forward will be limited.
The sale enables Marvell to sharpen its focus on core areas, such as data infrastructure and AI-focused chips, while streamlining operations and strengthening its balance sheet. Yet despite the company’s strong focus on high-growth areas within the semiconductor landscape, its stock performance paints a grim picture.
With the company’s market capitalization of around $62.9 billion, shares of this chipmaker have come crashing down nearly 42% from its January high of $127.48. So far this year, the stock has nosedived a notable 32%, sharply lagging behind the broader S&P 500 Index ($SPX), which has posted a modest 9.7% gain over the same stretch.
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Even after the recent sell-off, Marvell’s stock remains pricey, trading at 34 times forward earnings, which is well above the sector median of 23.5 times. However, it sits below its own five-year average of 38.7x, suggesting that while still a premium name, it’s somewhat more reasonably valued compared with its historical levels.
Marvell’s shares dipped nearly 5.6% on May 30, following the release of its fiscal 2026 first-quarter earnings on May 29, but the decline had little to do with the company’s performance. Chip stocks broadly fell that day amid external pressures, including President Donald Trump’s claims that China had violated its trade deal with the U.S. and reports that the administration planned to expand sanctions on the country’s tech sector.
Coming back to Marvell’s Q1 earnings performance, the company posted a record $1.9 billion in revenue, up an impressive 63% year-over-year (YoY) and slightly ahead of analyst estimates. Driving growth was the Data Center revenue of $1.4 billion, which not only accounted for 76% of total revenue but also increased 76% compared to the same quarter last year.
Marvell attributed this strong performance to rising production of its custom AI chips and robust demand for electro-optics products that support AI and cloud infrastructure. While the Data Center segment clearly stole the spotlight, other areas of the business also delivered solid contributions, highlighting the company’s broad-based momentum.
For instance, Enterprise Networking generated $178 million, marking a healthy 16% YoY increase, while Carrier Infrastructure experienced a breakout moment, with revenue soaring a remarkable 93% to $138 million. On the profitability side, adjusted earnings per share came in at $0.62, representing a striking 158% jump from the prior year and slightly beating Wall Street’s $0.61 estimate.
Marvell closed the quarter with $886 million in cash and equivalents against $4.2 billion in total debt, maintaining a solid financial position. The company also prioritized returning capital to shareholders, distributing $52 million in dividends and repurchasing $340 million of its own stock during the first quarter, underscoring its commitment to rewarding investors while navigating strong growth.
Marvell is set to release its fiscal 2026 second-quarter earnings after market hours on Thursday, Aug. 28. With AI-related sales already driving the bulk of its Data Center revenue and expected to expand further, the company appears well-positioned for sustained long-term growth, reinforcing its role as a key player in AI and cloud infrastructure.
For Q2, management anticipates the company’s revenue to be around $2 billion, plus or minus 5%. GAAP gross margin is projected between 50% and 51%, while non-GAAP gross margin is expected to be higher, ranging from 59% to 60%. Additionally, non-GAAP earnings per share are forecast at $0.67, with a margin of error of $0.05.
Meanwhile, analysts are also eyeing an ambitious outlook, projecting triple-digit growth in the bottom line, with EPS estimated at $0.51 for the quarter. Looking further ahead, analysts expect Marvell’s fiscal 2026 EPS to surge roughly 134% YoY to $2.15, before climbing another 31.6% to $2.83 in fiscal 2027.
As Marvell approaches its Q2 earnings, Morgan Stanley expects the company to deliver stronger-than-anticipated guidance, despite the recent divestiture of its Automotive Ethernet business and ongoing uncertainty around Amazon’s Trainium chip. Analysts led by Joseph Moore note that upside could come from optical products, which they see as more durable and higher-margin than the ASIC business, even as estimates were slightly lowered to account for the automotive divestiture.
While the Trainium 3 discussion may continue to create noise, Morgan Stanley expects steady sequential ASIC revenue, hitting $2 billion for the year, bolstered by a strong ramp in optical products. Overall, Wall Street appears highly bullish on MRVL, with the stock carrying a consensus “Strong Buy” rating.
Of the 33 analysts offering recommendations, a majority of 24 analysts are giving it a solid “Strong Buy,” two suggest a “Moderate Buy,” and the remaining seven give a “Hold.” MRVL’s average analyst price target of $92.86 indicates 25% potential upside from the current price levels. The Street-high price target of $149 suggests an even greater leap of 99% from here.
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On the date of publication, Anushka Mukherji did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com
