Marvell Earnings: Buy the Dip and Focus on the Fundamentals

Key Morningstar Metrics for Marvell Technology

• Fair Value Estimate: $90.00
• Morningstar Rating: ★★★★
• Morningstar Economic Moat Rating: Narrow
• Morningstar Uncertainty Rating: High

What We Thought of Marvell Technology’s Earnings

Marvell Technology’s MRVL July-quarter results met the midpoints of management guidance, with revenue rising 58% year over year and 6% sequentially to $2.01 billion. Guidance implies continued sequential growth, rising 3% at the midpoint to $2.06 billion.

Why it matters: October-quarter growth guidance missed our model, which we attribute to lumpy orders for Marvell’s custom artificial intelligence accelerators. We don’t see slightly lower short-term growth, implying competitive weakening or slowing AI investment. Lumpy quarterly orders are common in this market.

• The market remains uncertain of Marvell’s position in custom accelerators, particularly with Amazon, its first customer. We’re more confident. We believe Marvell’s holistic chip design prowess positions it well to retain and gain customers in an expanding custom silicon market.
• Marvell’s long-term opportunity in AI is promising, with its custom accelerators and optical connectivity chips. We expect strong double-digit growth in the medium term for both businesses as Marvell benefits from a rising wave of investment and keeps its market share.

The bottom line: We maintain our $90 fair value estimate for narrow-moat Marvell and see our long-term thesis for strong AI and data center growth bearing out. An 11% selloff after hours on tepid guidance and custom accelerator concerns creates a buying opportunity.

• Marvell stock has been sensitive to any data point or story about custom chips this year, with the selloff being the latest example. We see most of these conflicting reports as noise, with continued growth momentum as the true signal. The selloff appears overblown to us.
• While we’re bullish on Marvell’s prospects, we retain material conservatism against management’s calendar 2028 targets, which include a 20% market share of a $94 billion data center market. If Marvell were to hit these ambitious targets, there would be upside to our valuation.