Marvell Technology Reports Strong Q2 Revenue

Investing.com – Marvell Technology on Thursday reported second-quarter revenue that surpassed Wall Street estimates, driven by strong demand in its data center business, which nearly doubled revenue due to AI advancements.

Marvell Technology Inc (NASDAQ:MRVL) experienced a jump of over 9% in premarket trading on Friday.

For the three months ending Aug. 3, the company reported adjusted earnings of $0.30 per diluted share on revenue of $1.27 billion, aligning with analyst estimates for $0.30 per share and slightly above the $1.25 billion estimate.

Data center revenue, accounting for 69% of total growth, nearly doubled year over year, rising 92% to $880.9 million, compensating for the weakness in other markets such as enterprise networking, carrier infrastructure, consumer, and automotive.

The company noted, “We saw strong growth from our electro-optics products and our custom AI programs began to ramp,” and expressed optimism about seeing growth in some of its end markets. The forecast for the next quarter expects combined enterprise networking and carrier end markets to return to growth.

Looking ahead to Q3, EPS is projected in the range of $0.35 to $0.45 on revenue of $1.45 billion, slightly exceeding estimates of $0.38 EPS on $1.41 billion revenue.

In a post-earnings note, analysts at Morgan Stanley raised their price target for MRVL stock from $77 to $82 while maintaining an Equal Weight rating. They commented, “Marvell revenue momentum has come back significantly, supported by AI strength and a recovery across broad business sectors, exceeding our anticipated estimates.”

Despite concerns over valuation, analysts recognized that the premarket stock reaction seemed warranted as nearly all business segments have turned positive, management remains optimistic, and significant operating leverage persists with ongoing revenue growth.

Given valuation comparisons to other AI peers like NVDA and AVGO, analysts noted a premium on stock compensation, suggesting the stock typically trades at a high valuation. They predict enthusiasm for the company will return.

Additionally, Barclays analysts forecasted another quarter of high-teens growth for the data center in the upcoming fiscal Q4, with expected double-digit growth in the Carrier and Enterprise segments, and robust contributions from Consumer and Industrial/Automotive sectors.

Barclays stated, “We continue to support the story here as AI product advancements should drive more upside into next year, complemented by growth fundamentals in non-data center segments.”

Yasin Ebrahim contributed to this report.