Marvell: We Remain Bullish on Custom Accelerator Growth

Key Morningstar Metrics for Marvell Technology

• Fair Value Estimate: $90.00
• Morningstar Rating: ★★★★
• Morningstar Economic Moat Rating: Narrow
• Morningstar Uncertainty Rating: High

Marvell Technology MRVL is down 40%in the year to date as of May 30, primarily due to market concerns over rumored share losses for the firm’s custom accelerators.

Why it matters: We believe these concerns are overblown, and that Marvell’s position in Amazon’s Trainium chips and Microsoft’s Maia chips should endure and continue to drive strong overall growth.

• While we expect partial multisourcing with competitors like Alchip or GUC, we view these firms as design consultancies rather than full-blown chip designers like Marvell.
• In our view, Marvell has strong core IP that will keep it a preferred source for custom chip customers, even as they also utilize the likes of Alchip for portions of their total production.

The bottom line: Marvell is one of our top picks in networking semis, trading at an attractive discount to our $90 per share fair value estimate.

• We see Marvell as a long-term winner in artificial intelligence infrastructure via its custom accelerator chip designs and its optical connectivity chips, where we see the firm as best of breed.
• To us, this strong exposure stems from moaty intangible assets in chip design, which should fuel strong growth into the long term.

Coming up: We expect a positive catalyst for Marvell in June 2025, when the company holds a custom AI chip webinar to further detail its customer engagements and technology.

• We also anticipate continued strong growth through calendar 2025 should gradually assuage investor concerns that have weighed on the stock.

Between the lines: We aren’t concerned with multisourcing, instead seeing it as a natural way for customers to avoid vendor lock-in and diversify their supply chain in a supply-constrained environment.

• Our forecast is not contingent on Marvell being sole sourced in these chip programs or winning new programs, but simply on growth for the programs Marvell is already in which we expect to continue into future generations.