Key Highlights
- Shares of Marvell Technology (MRVL) climbed more than 7% following Nvidia’s announcement of its $12.9 billion Hugging Face acquisition
- The chip giant holds a $2 billion investment in Marvell and maintains a strategic alliance focused on silicon photonics technology
- Marvell delivered all-time high Q2 revenue of $2.74 billion, representing 37% annual growth, while Data Center segment revenue surged 46% to $2.17 billion
- The company boosted its Fiscal 2027 revenue projection to $12 billion and set Fiscal 2028 expectations at $18 billion
- Analysts maintain a Strong Buy rating on MRVL with a consensus price target of $302.33, suggesting approximately 35% potential upside
Shares of Marvell Technology (MRVL) rallied over 7% during Friday’s trading session, reaching an intraday peak of $223.67, following Nvidia’s confirmation that it would purchase open-source artificial intelligence platform Hugging Face in a $12.9 billion transaction.
Marvell Technology, Inc., MRVL
While the acquisition news provided a boost to AI semiconductor stocks broadly, Marvell experienced additional momentum due to its existing ties with Nvidia. The graphics chip leader has invested $2 billion in Marvell and established a collaborative partnership centered on silicon photonics integration and cross-platform compatibility. This arrangement enables enterprises to deploy AI systems using Marvell’s XPU technology within Nvidia’s NVLink framework.
Jensen Huang, Nvidia’s CEO, revealed that open-source models now account for more than half of the company’s revenue stream, underscoring the strategic rationale for the Hugging Face purchase. The platform boasts over 18 million registered users, hosts 3 million AI models, and serves more than 200,000 enterprise clients.
Given the interconnected nature of Nvidia and Marvell’s operations, positive developments for Nvidia translate into favorable conditions for Marvell as well.
Revenue Growth Remains Strong
Marvell’s latest quarterly performance provided additional momentum for the stock surge. Fiscal second-quarter revenue increased 37% from the prior year to an all-time high of $2.74 billion, exceeding company projections by $39 million. The Data Center division generated $2.17 billion in revenue, up 46% annually and representing 79% of total company sales. Adjusted earnings per share reached $0.94, reflecting 40% growth.
The company’s adjusted operating margin expanded to 36.6%, while adjusted operating income surpassed the $1 billion threshold for the first time. CEO Matt Murphy characterized AI-driven order activity as “exceptionally robust.”
Looking ahead to Q3, management projects revenue of approximately $3.15 billion, representing more than 50% year-over-year expansion. Data Center segment revenue is anticipated to increase roughly 75% during the period.
The company elevated its full-year Fiscal 2027 revenue forecast to $12 billion, indicating approximately 45% growth, while establishing Fiscal 2028 guidance at $18 billion, suggesting an additional 50% jump.
Optical Connectivity Drives Next Phase
Marvell is establishing itself as a critical provider in the transition from traditional copper-based connections to optical links within AI data center infrastructure. As artificial intelligence computing clusters expand into multi-rack configurations, copper interconnects face limitations related to power efficiency, signal integrity, and bandwidth capacity. Optical technology provides superior speed and reduced signal degradation.
The company offers PAM4 and coherent digital signal processors, silicon photonics solutions, and Ethernet networking switches. Its Ara and Aquila product lines enable 1.6T connectivity. The recent Celestial AI purchase adds a Photonic Fabric offering that links processors with shared memory pools across extensive computing environments. Celestial is projected to generate $500 million in annualized revenue by Q4 of Fiscal 2028, with expectations to double to $1 billion annually thereafter.
Additional acquisitions include Polariton for next-generation 3.2T photonic components and XConn for PCIe and CXL switching capabilities.
An enhanced partnership with Google could potentially deliver as much as $120 billion in revenue through Fiscal 2033.
Wall Street analysts currently assign MRVL a Strong Buy consensus rating, supported by 21 Buy recommendations and five Hold ratings, with a mean price target of $302.33.
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