Marvell Technology (MRVL) is a fabless semiconductor giant with a broad product portfolio. It spans computing, including custom AI chips, optics, networking, storage, and security.
The company’s major source of revenue is data centers, and in Q4, 74% of revenues came from that market. The rest of the revenue comes from end markets classified by the company as “communications” and “other.”
Unsurprisingly, the key driver of the stock is artificial intelligence. Marvell’s most important products are its custom AI accelerators, XPUs, and data center interconnect (DCI) modules.
The company reported its Q4 earnings on March 5. The stock closed 18.35% higher at $89.57 on the next day, according to Yahoo Finance.
The earnings were strong, and Goldman Sachs reset its Marvell price target.
The stock is up about 95% year to date, at the time of writing, Thursday morning, April 23, according to Yahoo Finance. Meanwhile, the SPDR S&P 500 index (SPY) is up about 4% in the same period.
The stock has outpaced the S&P 500, thanks to several key business deals and a rumor.
Key news for Marvell stock
On March 31, Nvidia and Marvell entered into a strategic partnership. The companies plan to connect Marvell to the Nvidia AI factory and artificial intelligence — radio access network (AI-RAN) ecosystem via Nvidia NVLink Fusion.
As part of the deal, Nvidia invested $2 billion in Marvell.
On April 20, Amazon expanded its partnership with Anthropic.
Amazon said it will invest $5 billion in Anthropic and up to an additional $20 billion in the future. Anthropic will secure up to 5 gigawatts of current and future generations of Amazon’s Trainium chips to train and power its AI models.
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This means Anthropic has committed to spending more than $100 billion over the next 10 years on AWS technologies. A key part of this news are Trainium chips, which Amazon designs in partnership with Marvell. It’s why this deal is excellent news for Marvell investors.
Marvell added roughly $5 billion in market cap on a rumored partnership with Google.
The source of the rumor was The Information. The Information’s rumors may not always be reliable, as its previous one claimed that Microsoft was considering leaving Marvell for Broadcom (AVGO). This was refuted by Marvell CEO and Chairman Matt Murphy and completely debunked on the company’s last earnings report.
The rumor that Google is looking to replace Broadcom with Marvell also carries little weight, since the two companies just revealed that they are expanding their partnership.
On April 22, Marvell confirmed the acquisition of Polariton Technologies, a developer of high-speed, low-power plasmonics-based silicon photonics devices.
As previously mentioned, DCI modules are a very important product. Polariton’s plasmonics will improve it, thanks to its advantages over traditional silicon photonics, enabling higher density, massively parallel optical links with ultra-low energy per bit.
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RBC Capital Markets raises Marvell price target
RBC Capital Markets Managing Director Srini Pajjuri updated his opinion on Marvell stock following Amazon and Anthropic’s extension of their partnership.
The analyst said the agreement includes nearly 1GW of Trainium capacity this year, which he estimates would amount to approximately 1.5 million Trainium2 and Trainium3 chips.
Pajjuri believes the deal is a material positive for AWS’s suppliers, Marvell and Astera Labs (ALAB), adding that the agreement gives him greater conviction in his 2027 estimates and longer-term growth expectations for both suppliers.
Related: Goldman Sachs resets Broadcom stock forecast
He estimates that each GW amounts to $2.5 billion to $3 billion in the XPU serviceable available market, of which he expects Marvell to account for at least half. He estimates approximately $1.6 billion in custom silicon revenues from AWS, representing 17% growth. Analyst noted that he expects upside to be somewhat constrained due to tight 3nm wafer supply.
In a research note shared with me, Pajjuri reiterated an outperform (buy) rating for Marvell stock and raised the price target to $170 from $115, based on a 31 multiple of his $5.51 EPS 2027 estimate.
This price target is based on the assumption that Marvell stock will trade slightly above its five-year average over the next 12 months, given 30% to 40% growth potential, share gains, and 35% or more expansion of the total addressable market for AI accelerators.
Pajjuri noted risks to Marvell rating and price target:
- Hyperscaler capex slowdown
- Stronger-than-expected ASIC competition
- Linear Pluggable Optics displacing Digital Signal Processor demand
Related: Morgan Stanley resets Intel stock price target ahead of earnings
