Marvell Technology shares jumped 23% on Monday after the chipmaker posted strong third-quarter results and gave an optimistic outlook for the future. The company’s data-center sales nearly doubled from a year ago to $1.1 billion, driven by surging demand for artificial intelligence. This growth reflects a wider trend of investor interest in anything related to AI and chips.
Marvell CEO Matt Murphy said the company’s AI-related revenue is projected to top $1.5 billion in the current fiscal year and $2.5 billion in 2025. The data-center segment now makes up 73% of Marvell’s total revenue, up from just 39% in the same period last year. In the latest quarter, Marvell beat expectations with earnings of 43 cents per share, above estimates of 41 cents.
Revenue rose 19% from the previous quarter to $1.52 billion, surpassing forecasts of $1.46 billion. The company expects fourth-quarter revenue to hit $1.8 billion and cash earnings to be 59 cents per share, both higher than analysts’ predictions. Marvell also announced a five-year partnership with Amazon Web Services to scale its Trainium AI chips and other custom computing solutions.
Marvell’s AI-driven revenue growth
The goal is to boost efficiency and lower costs for AWS and its customers, showing the need for large cloud-infrastructure providers to diversify their AI hardware. Currently, most AI training is done on Nvidia’s expensive graphics-processing units.
Increasing costs and supply constraints have led cloud providers like Amazon to look for more affordable options, such as Marvell’s products. After these positive developments, several analysts have increased their stock price targets for Marvell. Benchmark raised its target to $135 from $115, keeping a buy rating and calling Marvell a “unique non-Nvidia alternative to gain leverage to the AI/data center trade.” Bank of America analyst Vivek Arya upped his price target to $125 from $108, pointing to Marvell’s potential for major growth in AI electro-optics and custom chips.
Citi also lifted its price target to $112 from $91, commending Marvell’s strong quarter and its partnership with AWS. Some analysts, however, are cautious due to the stock’s high valuation. Morgan Stanley increased its price target to $102 from $82 but kept a neutral rating, citing the strong momentum from Trainium 2 chip builds for Amazon as a key driver while raising valuation concerns.
Marvell closed at $118.15 on Monday, with shares more than doubling year-to-date. As the company continues to benefit from AI-driven demand and its notable partnership with AWS, it remains to be seen whether Marvell can sustain its growth and challenge Nvidia’s dominance in the AI chip market.
