Shares of Marvell Technology Group Ltd. sank nearly 16% on Friday after the AI-focused chipmaker reported fiscal second-quarter results that were broadly in line with expectations but provided cautious guidance for the current quarter, leaving investors concerned about near-term growth.
Marvell posted adjusted earnings per share of $0.67, just above the $0.66 expected by analysts, while revenue came in at $2.01 billion, matching consensus estimates. Revenue grew 58% year-over-year, a record for the company, fueled in part by robust demand for its custom silicon and electro-optics products tailored for artificial intelligence workloads. CEO Matt Murphy highlighted the strength of AI-related demand, noting that these products have become a critical component for major cloud providers such as Amazon and Microsoft.
Despite the strong top-line growth, investors were disappointed by data center revenue, which came in at $1.49 billion, slightly below the $1.51 billion forecast. Looking ahead, Marvell projected fiscal third-quarter revenue of $2.06 billion ±5%, falling short of analysts’ estimate of $2.11 billion. Murphy attributed the guidance shortfall to “nonlinear growth” in the company’s custom AI chip business and described the “lumpiness” as typical when large hyperscalers build out infrastructure. He expects fourth-quarter growth to be substantially stronger than Q3, reflecting the uneven timing of large-scale cloud deployments.
While the company’s underlying fundamentals remain solid, investors expressed frustration over the lack of clarity regarding Marvell’s pipeline of new customers and projects, which some analysts view as critical to sustaining its 20% data center market share target. Cantor analysts noted in a research note that, without detailed visibility into the company’s upcoming contracts, it is difficult to fully evaluate long-term growth prospects.
Reflecting these concerns, Bank of America downgraded Marvell’s stock from buy to neutral, cutting its price target from $90 to $78 per share, citing uncertainties around AI growth in the near to medium term. The guidance and revenue miss underscore the challenges even high-growth semiconductor firms face as AI-related demand fluctuates across hyperscale cloud operators, highlighting that investor optimism can be tempered by short-term volatility in key segments.
Marvell’s performance illustrates the broader dynamics in the AI chip market, where strong secular demand for custom silicon meets the reality of project-by-project variability in large cloud infrastructure deployments. While Murphy remains confident in the company’s trajectory, investors will be closely watching the August and September earnings guidance updates for a clearer picture of how Marvell’s AI-focused strategy is unfolding.
Pump Radar
Stock Alerts