Free Trial

The Melt-Up In Marvell Is On; But Don't Chase It Higher

Marvell logo, sign at Marvell Technology headquarters in Silicon Valley - Santa Clara, California, USA - 2021

Key Points

  • Marvell Technology had a good quarter and gave solid guidance supported by AI demand. 
  • The stock is lagging behind NVIDIA but may catch up which means a new all-time high is possible. 
  • The analysts will be the next catalyst for this market. 
  • 5 stocks we like better than Marvell Technology

Marvell Technology NASDAQ: MRVL started moving higher before the Q1 earnings were released because of results released by NVIDIA NASDAQ: NVDA. NVIDIA’s results were down compared to last year but well above the consensus estimate and came with solid guidance. The guidance is mind-blowing and driven by data center/AI demand. Marvell is also exposed to AI and seeing high demand, evident in its CQ1 results.

The difference is that Marvell’s stock is lagging well-behind NVIDIA’s but is on track to catch it by the looks of the post-release action. The market is up a solid 20% following the release and still has a long way to go. 

Marvell: Mixed Results But In All The Right Ways 

Marvell had a mixed quarter, but it was mixed in all the ways investors love to see. The revenue of $1.32 billion is down 9.0% compared to last year but beat the consensus estimate on strength in the 1 area that counts today: AI. The company is still in the AI ramp's early phases and expects revenue to accelerate over the next few quarters. Given the surge in NVIDIA’s AI business, the company will likely see a similar surge, which is getting priced into the market. 

"AI has emerged as a key growth driver for Marvell, which we are enabling with our leading network connectivity products and emerging cloud optimized silicon platform. While we are still in the early stages of our AI ramp, we are forecasting our AI revenue in fiscal 2024 to at least double from the prior year and continue to grow rapidly in the coming years,” said Matt Murphy, Marvell's President and CEO.

The earnings were also better than expected at $0.31 adjusted, which exceeded the topline strength. The guidance may be cautious, forecasting sequential growth in Q2 and accelerating revenue growth, margin expansion, and earnings growth in the 2nd half. 

The Analysts Will Be The Next Catalysts For Marvell Stock 

The analysts have yet to update their outlook, but at least 3 have commented. Barclays analyst Blayne Curtis maintained an Overweight rating citing several factors in the company’s favor. In his view, Marvell is a safer way to play AI. The company’s tempered view of core markets and view of AI have stoked the fire regarding its growth. He and analysts from Citigroup and Wells Fargo expect the company to outpace peers over the next few quarters to several years.

The analysts’ consensus estimate is just above $61, which assumes the stock is fairly valued at the new high. This may cap gains until there are revisions which can be expected to be upward. In this case, the analyst will help drive the stock to new highs and possibly up to new all-time highs, as seen with NVIDIA. In that scenario, this stock could gain triple digits. 

The Technical Outlook: Marvell Is Melting Up 

Marvell is melting up on the good news of AI. AI will drive its business for several years and sustain it for a long time. The next few quarters would see accelerating growth and outperformance to help sustain a rally. The question is if this will be a slower, sustained rally or if the next quarter will bring blow-out results akin to NVIDIA and have that get priced into the market. Either way, investors stand to make a fair return with this stock. 

stock charts Nvidia and Marvell

Should you invest $1,000 in Marvell Technology right now?

Before you consider Marvell Technology, you'll want to hear this.

MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Marvell Technology wasn't on the list.

While Marvell Technology currently has a "Moderate Buy" rating among analysts, top-rated analysts believe these five stocks are better buys.

View The Five Stocks Here

10 Best Stocks to Own in 2024 Cover

Click the link below and we'll send you MarketBeat's list of the 10 best stocks to own in 2024 and why they should be in your portfolio.

Get This Free Report
Thomas Hughes
About The Author

Thomas Hughes

Contributing Author

Technical and Fundamental Analysis

Like this article? Share it with a colleague.

Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
4.6444 of 5 stars
$125.20+3.5%0.02%73.22Moderate Buy$116.90
Marvell Technology (MRVL)
4.5531 of 5 stars
$73.36+4.2%0.33%-64.92Moderate Buy$85.00
Compare These Stocks  Add These Stocks to My Watchlist 

Featured Articles and Offers

Recent Videos

Unlock Growth: Understanding Dividend Yield
Palantir Stock Excluded from S&P 500: Still a Buy?
GameStop Mania: Which Meme Stocks Will Follow?

Stock Lists

All Stock Lists

Investing Tools

Calendars and Tools

Search Headlines