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Marvell Technology Faces Revenue Forecast Miss, Shares Drop 6%

Marvell's Q4 earnings miss expectations with $1.15B forecast, but analysts see growth potential in AI-focused strategy.

By Alex P. Chase

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3/8, 09:10 EST
Marvell Technology, Inc.

Key Takeaway

  • Marvell Technology (MRVL) forecasts Q1 revenue at $1.15 billion, below analysts' expectations of $1.38 billion, causing a 6% premarket share drop.
  • Analysts from Needham, Piper Sandler, and KeyBanc raise MRVL price targets to $95-$100, citing long-term growth potential from AI-focused strategies.
  • Marvell's initiation of AI chip shipments to major clients like Google and Amazon Web Services highlights its strategic pivot towards the high-growth AI market.

Earnings Report and Future Projections

Marvell Technology (MRVL) recently disclosed its fourth-quarter earnings, revealing expectations for the current quarter's revenue to center around $1.15 billion. This forecast falls short of the $1.38 billion revenue projection analysts had anticipated. CEO Matt Murphy provided insight into the company's outlook, stating, “While we are forecasting soft demand impacting consumer, carrier infrastructure, and enterprise networking in the near term, we expect revenue declines in these end markets to be behind us after the first quarter, and project a recovery in the second half of the fiscal year.” Despite this optimistic long-term view, the immediate market reaction was negative, with shares dropping 6% to $80.02 in premarket trading.

Analysts' Optimism

Despite the initial market reaction to Marvell's guidance, several analysts have expressed a more positive long-term outlook for the company. Needham researchers, led by N. Quinn Bolton, have raised their price target on Marvell shares to $95 from $65, maintaining a Buy rating. They encourage investors to view the current weakness as an opportunity, particularly to gain exposure to Marvell's accelerating AI-levered portfolio. Similarly, Piper Sandler analysts Harsh Kumar and Robert Aguanno have increased their price target to $100 from $70, reiterating their Overweight rating. KeyBanc Capital Markets analysts John Vinh and Jim Long also raised their price target to $95 from $70, maintaining an Overweight rating, buoyed by Marvell's announcement of starting shipments of AI chips to customers, believed to include major players like Alphabet's Google and Amazon Web Services.

Strategic Moves in AI

The strategic focus on artificial intelligence (AI) technology appears to be a significant factor driving analysts' optimism towards Marvell Technology. The company's initiation of AI chip shipments to notable customers such as Google and Amazon Web Services underscores Marvell's potential growth trajectory in the burgeoning AI market. This move aligns with the broader industry trend of increasing reliance on AI technologies, positioning Marvell to potentially benefit from the expanding applications and demand for AI across various sectors.

Street Views

  • N. Quinn Bolton, Needham (Bullish on Marvell Technology):

    "We recommend investors buy on weakness, taking advantage of the weaker non-Data Center businesses to gain exposure to an accelerating AI-levered portfolio."

  • Harsh Kumar and Robert Aguanno, Piper Sandler (Bullish on Marvell Technology):

    "They increased its price target to $100 from $70 and reiterated their Overweight rating."

  • John Vinh and Jim Long, KeyBanc Capital Markets (Bullish on Marvell Technology):

    "The company has said it’s started shipping AI chips to customers—which the analysts believe includes Alphabet ‘s Google and Amazon Web Services."

Management Quotes

  • Matt Murphy, CEO of Marvell Technology:

    "While we are forecasting soft demand impacting consumer, carrier infrastructure, and enterprise networking in the near term, we expect revenue declines in these end markets to be behind us after the first quarter, and project a recovery in the second half of the fiscal year."