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Marvell Technology Inc. Falls Over 7% on Revenue Forecast Miss

Marvell's stock falls over 7% as $1.15 billion revenue forecast misses expectations, despite AI-driven data-center growth.

By Barry Stearns

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3/7, 20:21 EST
Marvell Technology, Inc.

Key Takeaway

  • Marvell Technology Inc.'s stock fell over 7% due to a revenue forecast of $1.15 billion, missing expectations by $230 million.
  • Despite the shortfall, AI-driven data-center growth surged 54% year-over-year, highlighting strong sector performance.
  • The company announced a $3 billion expansion of its stock-buyback program, signaling confidence amidst cautious investor sentiment.

Revenue Projection Disappointment

Marvell Technology Inc. faced a stock drop of over 7% in Thursday's extended session despite emerging as a promising investment opportunity in the artificial intelligence sector. The company projected revenue of $1.15 billion for the fiscal first quarter, falling short of analysts' expectations of $1.38 billion. Additionally, Marvell expects adjusted earnings per share of 18 to 28 cents, below the FactSet consensus of 41 cents.

Chief Executive Matt Murphy acknowledged soft demand in consumer/carrier infrastructure and enterprise networking, anticipating a recovery in the second half of the fiscal year after revenue declines in these areas in the first quarter. Marvell's overall revenue for the fiscal fourth quarter remained nearly flat, with notable growth in the data-center business driven by AI investments.

Growth Opportunities in AI

Marvell foresees growth in generative AI applications propelling cloud customers to establish new data centers. The company also anticipates increased investment in inferencing to enhance bandwidth between data centers. The data-center segment experienced a 38% sequential growth, surpassing guidance, with a remarkable 54% year-over-year revenue growth in this end market.

On an adjusted basis, Marvell reported earnings of 46 cents per share, aligning with the FactSet consensus. The company also disclosed a $3 billion expansion of its stock-buyback program, supplementing the existing repurchase authority of approximately $300 million.

Stock Performance and Investor Sentiment

Despite recent stock declines, Marvell's shares have surged by 63% in the last three months and doubled over a 12-month period. The market's response to Marvell's revenue projection shortfall reflects a cautious sentiment among investors, balancing the company's growth potential in AI with current business challenges.

Management Quotes

  • Matt Murphy, CEO of Marvell Technology Inc.:

    "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." "We see exciting new opportunities ahead of us from growth in generative AI applications driving cloud customers to build new data centers. We also expect a positive uplift from increased investment in inferencing, which will drive more bandwidth between data centers."