Marvell Technology saw a significant boost in its stock price, climbing nearly 11% in early trading on Friday. This surge highlights the growing demand for custom AI chips from major technology firms. If this upward trend persists, it could enhance Marvell’s market value by over $10 billion.
The optimistic forecast from Marvell follows Broadcom’s announcement predicting over $100 billion in AI chip sales for the upcoming year, indicating that the demand for AI technology is broadening beyond industry leaders like Nvidia. Both Marvell and Broadcom specialize in technologies that facilitate high-speed connections among processors, but analysts from Citigroup note that Marvell’s emphasis on integrating chips closely within a single system may enhance its importance as cloud companies expand their AI capabilities.
Marvell projects that its fiscal 2028 revenue will rise by nearly 40% to approximately $15 billion, surpassing the LSEG consensus estimate of $12.92 billion. Additionally, the company has raised its fiscal 2027 outlook to indicate more than 30% growth, nearing $11 billion.
Investment in AI infrastructure is anticipated to exceed $630 billion this year from industry giants such as Alphabet, Meta, Microsoft, and Amazon, driving up demand for Marvell’s custom ASICs and high-speed interconnects that facilitate data transfer among AI processors, memory, and servers. Chris Koopmans, the company’s president and COO, stated that this demand is “still growing massively.”
ASICs, or application-specific integrated circuits, are designed for specific functions or workloads, making them more efficient than general-purpose graphics processing units. Analysts foresee a strong trajectory for Marvell’s data-center business due to increasing interest in its digital signal processors that enable high-speed optical links in AI servers, coupled with a multi-year ramp-up in custom AI processors that is exceeding initial expectations.
In the data-center segment, which is Marvell’s largest business, revenue increased by 21% to $1.65 billion, slightly above the estimated $1.64 billion. Currently, Marvell’s stock is trading at a forward price-to-earnings ratio of 19.99, compared to Broadcom’s 25.31, as indicated by LSEG data.
As the AI sector continues to evolve, Marvell stands poised to capitalize on the expanding market, showcasing a promising outlook for growth and innovation in technology.