TLDR
- Marvell stock plunged 17% in premarket trading despite beating Q4 earnings expectations
- Company forecast Q1 revenue of $1.88 billion, in line with average estimates but below highest projections of $2 billion
- CEO Matt Murphy noted custom AI silicon programs have entered volume production with anticipated strong full-year revenue growth
- Marvell is considered a key beneficiary of AI computing build-out, providing chip design services to major tech companies
- The stock decline reflects broader investor nervousness about AI-related companies amid concerns about customer spending slowdowns
Marvell Technology saw its stock tumble sharply despite posting better-than-expected fourth-quarter earnings. The AI chip maker’s forecast disappointed investors who were hoping for more impressive growth from the artificial intelligence boom.
The Santa Clara, California-based company reported fourth-quarter revenue of $1.82 billion. This exceeded analyst expectations of $1.8 billion.
Adjusted earnings came in at 60 cents per share. This was slightly above the consensus estimate of 59 cents.
However, Marvell’s forecast for the current quarter failed to excite investors. The company projected first-quarter revenue of about $1.88 billion.
While this forecast aligned with average analyst estimates, some projections had reached as high as $2 billion. The gap between expectations and guidance triggered the selloff.
Marvell shares fell 17% in premarket trading on Thursday. They had already declined 18% this year before closing at $90.14.
The stock drop reflects broader market concerns about AI-related companies. Investors have grown worried that customers might slow their spending on AI infrastructure.
These concerns intensified when Chinese startup DeepSeek released an AI model that it claimed was relatively cheap to produce. This raised questions about whether the industry would need as much costly equipment as previously thought.
“Investors were already very ‘skittish’ about AI names the last few weeks,” noted Tore Svanberg, an analyst at Stifel Financial Corp. Marvell’s report “probably doesn’t help calm those nerves.”
The company has positioned itself as a key player in the artificial intelligence computing build-out. Marvell provides chip design services, helping major tech customers develop their own data center semiconductors.
These “hyperscalers” have been increasing efforts to produce processors internally. They aim to optimize their computer networks specifically for artificial intelligence software and services.
Amazon.com Inc. ranks among Marvell’s largest customers, according to data compiled by Bloomberg. This relationship highlights the company’s importance in the AI supply chain.
Despite the stock decline, Marvell’s CEO Matt Murphy remained optimistic about the company’s trajectory. “Our custom AI silicon programs have now entered volume production, and we continue to see strong growth from our interconnect products,” he stated in the earnings release.
Murphy further emphasized, “We anticipate strong revenue growth for the full fiscal year.” This outlook suggests the company expects the current quarter’s performance to be just a temporary setback.
Analysts maintain positive views on Marvell
Industry analysts maintain positive views on Marvell’s position in the growing AI chip market. Raymond James analyst Srini Pajjuri recently reaffirmed an Outperform rating on the stock.
“We expect the custom AI accelerator market to grow to $50B+ by 2028, and believe that MRVL is well-positioned for significant share given its strong IP, system-level expertise, and execution track record,” Pajjuri wrote.
The impact of Marvell’s results extended beyond just its own stock. Other chipmakers tied to the AI surge also experienced downward pressure.
Broadcom Inc., another company benefiting from AI demand, saw its stock fall 3.5% in after-hours trading following Marvell’s report. Broadcom was scheduled to release its own quarterly report on Thursday.
For the upcoming quarter, Marvell expects earnings of 56 cents to 66 cents per share, excluding some items. This range encompasses the analyst projection of 60 cents.
Three months earlier, Marvell had delivered better-than-expected results that drove its shares to a record high. The contrast between that reception and the current response demonstrates how investor expectations have shifted.
The company sells a portfolio of chips and hardware products for various markets including data centers, 5G infrastructure, networking, and storage. Marvell also helps large technology companies design their own AI semiconductors, called ASICs (application specific integrated circuits).
Despite the current stock decline, Marvell had gained 15% over the past 12 months prior to this earnings announcement. This longer-term performance suggests continued investor confidence in the company’s fundamental business model and growth prospects.
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