Marvell Technology Inc. (NASDAQ:MRVL), says that its continued success in the custom AI chip business has helped it to beat street estimates for its third financial quarterly.
The shares of this semiconductor giant have doubled in value since August, but Wall Street is convinced they have not gotten too far ahead.
The stock of Marvell is expected to continue its upward trend in the next year, as the company has a strong position to take advantage of artificial intelligence’s tailwinds.
Marvell has a business relationship with Hyperscalers
Marvell recently extended its partnership with Amazon in artificial intelligence products and data center connectivity.
Wilmington-based company, which also makes AI chips for Microsoft and Google.
Statista estimates that the artificial intelligence market will reach $1.0 trillion in the next 10 years.
AI is already boosting the top line of a company.
According to UBS analyst Timothy Arcuri, the revenue generated by artificial intelligence in third quarter was over $500 Million.
He is convinced that MRVL’s AI revenues will exceed the initial estimates of $1.5 Billion this year, and $2.5 Billion in fiscal 2026.
Marvell stocks also pay an extra dividend yield of 0.21 %.
MRVL’s executives confident of the future
Marvell’s recent quarter saw a significant increase in the number of custom ASIC/AI devices.
The management is confident that this strength will continue in the next quarter.
MRVL expects to generate $1.8 billion of revenue in the current quarter, based on 59-cents per share adjusted earnings.
Comparatively, analysts were at 1,65 billion dollars and 52 cents a share.
The Jefferies analyst, Blayne C. Curtis says that Marvell Technology “can maintain its adjusted gross margin at around 60%” even with increased ASIC revenues.
He had set a price of $110 for the stock, which Marvell has now surpassed.
What is the highest price that Marvell could reach?
Harlan Sur, an analyst at JPMorgan, is one of the most bullish Wall Street experts.
Sur expects Marvell to rise in price up to $130, which indicates an additional 8.0% potential gain.
The analyst said in a note to clients today that the company’s cyclical business is now inflecting upwards and that the AI/cyclical headwinds would continue through CY25 and lead to a period of multiple quarters with positive EPS revisions.
Marvell is a beneficiary of Intel’s slowdown and its struggles to compete, especially in the market for data centres.
Custom chip designs and a focus on ARM processors helped gain them market share. This is especially true as cloud providers look for alternatives to Intel’s x86-based solutions and Nvidia’s supply-constrained CPUs.
Jim Cramer, host of Mad Money and a famous investor, is also a fan.
The following post Marvell Stock Analysis: Overvalued or Undervalued? This post may change as new information becomes available
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