Marvell Stock Sinks 35%, But Most Analysts Are Bullish on MRVL Ahead of Q2

Marvell Technology (MRVL) stock has pulled back after a significant rally, falling 35.6% from the 52-week high. Despite the sell-off, most analysts covering MRVL remain bullish ahead of its Q2 earnings release scheduled for Aug. 27.

Analysts’ optimism stems from solid customer demand for Marvell’s data center products and strong bookings that point to a multiyear growth cycle.

The broader capital spending environment also supports the thesis. Hyperscalers are continuing to invest heavily in AI infrastructure, creating a favorable backdrop for semiconductor suppliers whose products enable the networking and computing infrastructure required for AI workloads. For Marvell, sustained increases in customer spending could translate into stronger bookings and improving revenue visibility over the coming quarters.

Marvell Q2 Earnings: Here’s What to Expect

Marvell’s second-quarter results are expected to highlight continued strength across its data center portfolio. Management expects revenue of $2.7 billion, representing 12% sequential growth and a 35% increase from the year-ago quarter. The outlook suggests that Marvell’s growth trajectory is accelerating.

The data center business is expected to lead that acceleration. Management projects data center revenue to rise in the mid-to-high teens sequentially and approximately 45% year-over-year (YOY), significantly ahead of the 11% sequential and 27% YOY growth recorded in the first quarter.

Further, the solid momentum in its business will likely sustain in the quarters ahead. Marvell had previously anticipated high-single-digit sequential revenue growth during the current fiscal year, with quarterly revenue reaching roughly $3 billion toward the end of the fiscal year. That view changed following the first-quarter results, when management raised its expectations to double-digit sequential growth in the second quarter and at least 10% sequential growth in Q3 and Q4.

Under the revised trajectory, Marvell could reach the $3 billion quarterly revenue milestone as early as the third quarter. This projection is expected to increase further as demand remains exceptionally strong.

As for the full year, Marvell projects fiscal 2027 revenue to rise about 40% YOY to nearly $11.5 billion, while data center revenue is projected to increase approximately 50%. Interconnect will likely be the main contributor, with growth now expected to exceed 70%, up from the company’s earlier forecast of roughly 50%. Communications and other end markets are expected to expand at a slower, but still healthy, rate of around 10%.

Notably, the Interconnect demand is closely linked to the continued expansion of AI clusters. As hyperscalers deploy increasingly large-scale systems, demand for 1.6-terabit networking should remain a key growth catalyst. Scale-up and scale-across architectures could provide additional opportunities as AI infrastructure becomes more complex and bandwidth-intensive.

Beyond fiscal 2027, Marvell’s custom business is likely to more than double YOY in fiscal 2028, while Ethernet switching is positioned for further growth. Overall, data center revenue could increase by roughly 55% in fiscal 2028, implying another year of accelerated expansion.

In summary, the strong bookings, growing interconnect demand, and increasing contributions from custom silicon position Marvell to deliver solid multi-year growth.

The revenue acceleration should provide meaningful operating leverage and support earnings growth. Marvell expects adjusted earnings per share of $0.88 to $0.98, with the $0.93 midpoint representing approximately 50% YOY growth.

The Key Takeaway

Marvell enters its second-quarter earnings report with a strong demand backdrop. Solid demand for data center products and the expansion of custom AI silicon point to strong growth ahead. Analysts remain bullish and maintain a “Strong Buy” rating ahead of the Q2 earnings release.

Despite the favorable operating outlook, investors should not overlook valuation risk. Marvell stock has already benefited substantially from the AI-driven rally, and its forward price-to-earnings ratio of 72.30 times reflects considerable expectations for future growth.

The elevated valuation could limit near-term upside.

On the date of publication, Amit Singh 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. For more information please view the Barchart Disclosure Policy here.