Company Reports

We raise our fair value estimate for narrow-moat Marvell Technology to $75 per share, from $65, as we raise our medium-term revenue forecast to account for significant growth in generative artificial intelligence sales. We believe Marvell will be a significant beneficiary of investment into generative AI with diverse exposure across custom accelerators, optical chips, and merchant switch chips. Management now sees upside to the targets provided at its AI investor day in April, which we see as positive and aligned with our bullish long-term growth thesis. Marvell’s non-AI end markets remained weak in the first fiscal quarter, but we believe AI strength will more than offset weakness elsewhere through fiscal 2025, and that softer demand is a short-term dynamic. We see Marvell as fairly valued. Investors eager to play into generative AI may see a good opportunity currently, given overvaluations of other AI beneficiaries under our coverage.

We view Marvell Technology as a strong competitor in networking chips, resulting from a multiyear business pivot using acquisitions, divestitures, and organic development to focus on the cloud data center market. In our view, the new-look Marvell offers strong growth potential, impressive profitability, and a healthy competitive position. Between switching, processing, and optical chips, Marvell has one of the broadest networking silicon portfolios in the world, and we believe it is primed to expand faster than its underlying markets as future networking setups utilize greater content and we anticipate Marvell will continue to win share even in an expanding market. In particular, we believe Marvell will be a significant beneficiary of investment in generative artificial intelligence, or AI, with its strong position in optical chips and a burgeoning custom accelerator business.

We view Marvell Technology as a strong competitor in networking chips, resulting from a multiyear business pivot using acquisitions, divestitures, and organic development to focus on the cloud data center market. In our view, the new-look Marvell offers strong growth potential, impressive profitability, and a healthy competitive position. Between switching, network processing, and optical chips, Marvell has one of the broadest networking silicon portfolios in the world, and we believe it is primed to expand faster than its underlying markets as future networking setups utilize greater content and we anticipate Marvell will continue to win share even in an expanding market.

We raise our fair value estimate for shares of narrow-moat Marvell Technology to $65, from $61, after the firm provided artificial intelligence, or AI, targets ahead of our expectations and announced a new custom accelerator customer. We have raised our longer-term forecast for Marvell's data center revenue as a result. We retain our confidence in the firm's strategy for supporting generative AI networks. We see networking companies like Marvell as key beneficiaries of generative AI spending, especially with exposure to custom accelerator projects outside of traditional networking. Marvell's portfolio, centered around data center infrastructure, aligns well to continue reaping the rewards of generative AI investment, in our view. Shares dipped about 2% following the investor event, which to us shows that the market has already baked in aggressive AI growth. We see the stock as fairly valued.

We maintain our $61 fair value estimate for shares of narrow-moat Marvell Technology as we bake in lower short-term expectations but continue to expect strong long-term growth. In our view, Marvell’s enterprise, telecom, and consumer end markets are experiencing significant softness due to spending slowdowns after solid investment in the previous two years. On the other hand, Marvell’s artificial intelligence products are driving tremendous growth in data center sales. We continue to see the firm as well-positioned in both data center and enterprise networking. It has strong capabilities in merchant silicon, optical chips, and custom chip design that carve its moat. We believe AI will become Marvell's increasingly large growth driver over the next five years. Shares dropped 8% afterhours on weak guidance in nondata center markets, and we still see shares as overvalued. While we are bullish on Marvell’s AI opportunity, we believe it has been priced into shares too heavily.

We view Marvell Technology as a strong competitor in networking chips, resulting from a multiyear business pivot using acquisitions, divestitures, and organic development to focus on the cloud data center market. In our view, the new-look Marvell offers strong growth potential, impressive profitability, and a healthy competitive position. Between switching, network processing, and optical chips, Marvell has one of the broadest networking silicon portfolios in the world, and we believe it is primed to expand faster than its underlying markets as future networking setups utilize greater content and we anticipate Marvell will continue to win share even in an expanding market.

We maintain our $61 fair value estimate for shares of narrow-moat Marvell Technology after a mixed quarter showed terrific strength in cloud and artificial intelligence networks, but weakness elsewhere. Primarily, Marvell’s carrier infrastructure sales, which are exposed to 5G buildouts, are seeing a drop-off in demand as the firm heads into 2024. In our view, the strength of Marvell’s AI sales should more than offset the weakness in carrier customers. We’ve long liked Marvell’s cloud exposure and its rapid growth resulting from AI has led us to meaningfully raise our forecast for the firm’s data center sales in fiscal 2025, which ends in January 2025. We see Marvell as well positioned to service rising network traffic with its command of the optical chip market and believe it can build momentum with its custom processing chips for hyperscale cloud customers in AI networks. Shares dipped on the weak carrier outlook and we see the stock as modestly undervalued.

We maintain our $61 fair value estimate for shares of narrow-moat Marvell Technology after it reported fiscal second-quarter results and fiscal third-quarter guidance in line with our expectations. On the positive side, Marvell materially raised its outlook for artificial intelligence revenue growth this year. On the negative side, the firm pushed out its outlook for recoveries in its data center storage and enterprise networking businesses. We still view fiscal 2024 as a mixed bag, with promising strong growth out of AI partially offsetting downcycles in some of Marvell’s other customer end markets. Long-term, we continue to view Marvell as very well positioned in data center infrastructure and able to benefit from surging AI spending. Shares pulled back after the release, we think due to pushed-out recoveries in storage and enterprise markets. We now see shares as undervalued.

We raise our fair value estimate for Marvell Technology to $61 per share, from $54, after reporting decent fiscal first-quarter results and providing bullish long-term commentary. Marvell quantified targets for artificial intelligence-derived revenue for the first time, which include a quadrupling of sales over the next two years. While we already saw large-scale cloud demand as nearly insatiable, we believe AI takes it to another level and makes Marvell’s new targets achievable. In the short term, it appears that inventory digestion at storage customers that has hampered sales of late has troughed, and we expect Marvell to return to sequential growth next quarter. In our view, Marvell is well-positioned to serve data infrastructure needs over the long term with its differentiated chips—a belief that underpins our narrow economic moat rating and makes the firm ripe to benefit from a secular trend like AI. Shares rose 18% after hours on the AI bullishness. Shares are up 62% year to date based on after-hours levels, and we now see them as fairly valued.

We view Marvell Technology as a strong competitor in networking chips, resulting from a multiyear business pivot using acquisitions, divestitures, and organic development to focus on the cloud, 5G, and automotive markets. In our view, the new-look Marvell offers strong growth potential, impressive profitability, and a healthy competitive position. Between switching, network processing, and optical chips, Marvell has one of the broadest networking silicon portfolios in the world, and we believe it is primed to grow faster than its underlying markets as future networking setups utilize greater content and we anticipate Marvell will continue to win sockets over competitors.

We view Marvell Technology as a strong competitor in networking chips, resulting from a multiyear business pivot using acquisitions, divestitures, and organic development to focus on the cloud, 5G, and automotive markets. In our view, the new-look Marvell offers strong growth potential, impressive profitability, and a healthy competitive position. Between switching, network processing, and optical chips, Marvell has one of the broadest networking silicon portfolios in the world, and we believe it is primed to grow faster than its underlying markets as future networking setups utilize greater content and we anticipate Marvell will continue to win sockets over competitors.

We trim our fair value estimate for Marvell Technology to $54 per share, from $57, behind lowered expectations for fiscal 2024. Marvell’s fiscal fourth-quarter results were largely in line with our expectations, but guidance for the first quarter indicates further declines before a recovery. We retain confidence that long-term underlying demand for Marvell isn’t under threat, but inventory corrections, particularly of the severe kind for storage drives, will weigh heavily on fiscal 2024 results. The data center and enterprise markets, Marvell’s two largest, are particularly affected. Nonetheless, we expect the firm to see a sharp rebound when current digestion subsides, and continue to see Marvell’s portfolio as differentiated, moaty, and able to outperform its underlying markets in the long run. The market reacted more harshly to the quarter than we did, with shares down 9% after hours. We still see significant upside in Marvell for long-term investors.

On Jan. 11, 2023, narrow-moat Marvell Technology announced a succession plan for its CFO position and narrowed its guidance for the fiscal fourth quarter of 2023. We make no changes to our thesis or our $57 fair value estimate. Jean Hu, Marvell's incumbent chief financial officer, is leaving effective Jan. 20 to join AMD as its CFO. Replacing her will be Willem Meintjes, Marvell's current chief accountant and treasurer, who has internally been the named successor to Hu for years.

We view Marvell Technology as a strong competitor in networking chips, resulting from a multiyear business pivot using acquisitions, divestitures, and organic development to focus on the cloud, 5G, and automotive markets. In our view, the new-look Marvell offers strong growth potential, impressive profitability, and a healthy competitive position. Between switching, network processing, and optical chips, Marvell has one of the broadest networking silicon portfolios in the world, and we believe it is primed to grow faster than its underlying markets as future networking setups utilize greater content and we anticipate Marvell will continue to win sockets over competitors.

We upgrade Marvell Technology's economic moat rating to Narrow, from None, as we have greater confidence in the firm's ability to defend its competitive position over the next 10 years. We also raise our capital allocation rating for Marvell to Exemplary, from Standard, as we believe the balance sheet is sound and the firm's investments have helped it carve a moat and structurally improve its profits. We maintain our $57 fair value estimate as haircuts to our long-term forecast offset the moat upgrade's effect on our valuation. We see shares as undervalued, with short-term weakness creating a buying opportunity for long-term investors.

We think Marvell Technology has emerged as a strong competitor in the networking chip market following a multiyear business shift to acquisitions, divestitures, and organic development to focus on high-growth cloud, 5G, and automotive markets. Between data processing units, or DPUs, optical interconnect, and Ethernet solutions, Marvell has one of the broadest networking silicon portfolios in the world, and we think it is primed to steal market share from incumbent Broadcom with bleeding-edge technology.

We lower our fair value estimate for no-moat Marvell Technology to $57 per share, from $62, following disappointing fiscal fourth-quarter guidance that missed our expectations. Marvell is anticipating a pronounced effect on its sales from inventory corrections at storage customers next quarter, as well as some modest order pushouts elsewhere in the business. We see the former as a short-term cyclical dynamic, but one with a material impact on results over the next two to three quarters. We view Marvell’s networking sales as less prone to such cyclicality, but remind investors that storage still accounts for close to a quarter of the business. Long-term, we continue to see a double-digit top-line growth runway for Marvell, with the firm a key beneficiary of secular trends toward high-speed networking and 5G networks. Investors with a long-term horizon should still consider shares undervalued, especially after dropping 7% after hours on the print.

We maintain our $62 fair value estimate for no-moat Marvell Technology after it reported fiscal second-quarter results in line with our expectations. Marvell once more enjoyed high-flying top-line growth and margin expansion as it benefits from secular trends toward the cloud and 5G. We credit the firm for battling through ongoing supply constraints and continue to see a long runway of profitable and rapid growth for Marvell’s comprehensive data infrastructure portfolio. Shares dipped as much as 4% after hours, likely because of weaker forward-looking supply commentary in Marvell’s data center market. We view tight supply slowing revenue growth as a short-term phenomenon, and are bullish on Marvell’s long-term demand. We view shares as undervalued.

We think Marvell Technology has emerged as a strong competitor in the networking chip market following a multiyear business shift to acquisitions, divestitures, and organic development to focus on high-growth cloud, 5G, and automotive markets. Between data processing units, or DPUs, optical interconnect, and Ethernet solutions, Marvell has one of the broadest networking silicon portfolios in the world, and we think it is primed to steal market share from incumbent Broadcom with bleeding-edge technology.

We are maintaining our $62 fair value estimate for Marvell Technology shares after its fiscal first-quarter results came in line with guidance and the outlook for the fiscal second quarter met our expectations. Marvell’s data center business had a great quarter, which more than offset continued supply chain weakness in its enterprise networking business. We think its data center growth can continue at a good pace even though year-over-year comparisons for the rest of the year will now be predominantly organic. We continue to expect more than 40% revenue growth for fiscal 2023, reflecting Marvell’s comprehensive portfolio for data infrastructure that we think is seeing impressive traction in cloud applications. We now view shares as fairly valued.