This Once-Hot AI Stock Now Looks Deeply Undervalued

Marvell Technology is well positioned for the next wave of artificial intelligence growth. It is a major player in data center networking, with rising demand for its custom chips, interconnects, and switching products. The stock may look pricey based on near-term earnings, but its longer-term outlook helps to justify that valuation. Marvell was one of Morningstar Chief US Market Strategist Dave Sekera‘s picks on a recent episode of The Morning Filter podcast, 5 Stocks to Buy Trading at Big Discounts.

We see Marvell as a differentiated provider of networking and processing chips to data centers, enabling impressive growth and profitability. With 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 use more content. We anticipate Marvell will continue to win share even in an expanding market. We believe the company will be a significant beneficiary of investment in generative AI, given its strong position in optical chips and burgeoning custom accelerator business.

Key Morningstar Metrics for Marvell

• Fair Value Estimate
  : $360
• Star Rating
  : 4 Stars
• Economic Moat Rating
  : Narrow
• Uncertainty Rating
  : High

Economic Moat Rating

In our view, Marvell holds intangible assets in networking chip design that enable it to compete at the cutting edge and defend its position against well-capitalized competitors. Marvell has invested billions of dollars in research and development over the past decade to create a portfolio of differentiated intellectual property from which it can draw to build custom and semicustom designs for myriad applications and customers. Marvell’s pricing power shows in its healthy gross margins as it aggressively adds new sockets and expands within existing customers. We believe higher levels of customization will result in switching costs and believe Marvell may even generate R&D synergies in the future as technologies become intertwined.

Read more about Marvell’s moat rating.

Fair Value Estimate for Marvell Stock

Our $360 fair value estimate implies a fiscal 2027 price/adjusted earnings ratio of 84 times and enterprise value/sales of 24 times. Against our estimates for fiscal 2028 and 2029 adjusted earnings, our valuation implies multiples of 45 times and 23 times, respectively. We expect 54% sales growth over the next five years, primarily from organic share gains. The primary driver of our valuation is growth in data center revenue. We expect non-GAAP gross margin to be the high 50s in the long run. We see non-GAAP operating margin expanding well above fiscal 2025’s 35%. For fiscal 2031, our estimates are $70 billion in sales, 57% gross margin, 48% operating margin, and $34 in EPS.

Read more about Marvell’s fair value estimate.

Risk and Uncertainty

Marvell’s business is highly concentrated in data center chips. This delivers great growth but creates high sensitivity to the rate of data center investment. We expect the company to face continued competition from well-capitalized rivals. We also note Marvell’s active acquisition strategy, which creates the risk of overpaying and diluting shareholder value. Finally, we see geopolitical risk; Marvell could be a target of national security restrictions similar to what we’ve seen imposed on other chipmakers by the US and China. The company has already cut some R&D roles in China to assuage US concerns.

Read more about Marvell’s risk and uncertainty.

Marvell Bulls Say

• Marvell’s strong position in optical chips and burgeoning custom chip business offer a strong foothold into generative AI infrastructure, which should fuel high growth.
• Marvell’s strong non-GAAP profitability reflects moaty pricing power, in our view.
• We believe a wide portfolio of switches, processors, and optical chips gives Marvell ample opportunity for cross-selling and share gains.

Marvell Bears Say

• Marvell risks being unable to invest adequately to keep up with massive peers like Broadcom and Nvidia.
• Marvell is highly concentrated in data centers, which makes it highly sensitive to the rate of data center and AI spending.
• Marvell is a frequent acquirer, and it risks overextending itself or overpaying in the future, diluting shareholder value.

This article was compiled by Jess Bebel and Sylvia Hauser. Data as of Oct. 27, 2026, close unless otherwise noted.