Marvell stock drops on weak guidance despite strong revenue growth

Marvell Technology shares tumbled Friday after the semiconductor company issued weaker-than-expected guidance, overshadowing otherwise strong quarterly results.

The chipmaker, which has been viewed as a key player in the artificial-intelligence hardware race, is struggling to convince investors that it can translate early momentum into long-term market share.

Earnings beat but guidance disappoints

Marvell reported earnings for the quarter ended in early August of 22 cents per share, swinging to profit as revenue climbed 58% year over year to $2.01 billion.

Adjusted earnings for the current quarter are projected at 74 cents per share, plus or minus five cents, compared with Wall Street expectations of 72 cents.

However, investors focused on revenue guidance of $2.06 billion, plus or minus 5%, which fell short of analysts’ forecast of $2.11 billion.

Shares sank 14% in premarket trading Friday to $66.75, extending a decline of more than 30% this year.

The muted outlook highlighted ongoing weakness in Marvell’s crucial data-centre business.

Despite optimism about demand for custom AI chips, questions remain about whether the company can secure long-term deals with hyperscale clients such as Amazon and Microsoft.

Market concerns over AI growth trajectory

Marvell stock surged earlier in the year alongside Broadcom, as investors anticipated that cloud customers would diversify beyond Nvidia by adopting custom silicon.

Yet Marvell’s AI revenue growth has lagged peers.

Melius Research analyst Ben Reitzes noted in a report that while Nvidia projects 50% AI growth next year and Broadcom expects at least 60%, Marvell’s 30% growth suggests it has yet to gain significant share.

Reitzes holds a Hold rating on the stock with a $70 price target.

Concerns have also mounted about Marvell’s relationship with Amazon, its largest custom AI chips customer.

Analysts suggest that the company may be losing business to Taiwan-based Alchip Technologies.

William Blair analyst Sebastien Naji acknowledged the risk of market share loss but said the company could still evolve its ASIC business into a more diversified and resilient operation.

He maintained an Outperform rating, pointing to management’s confidence in a fiscal 2029 goal of 20% share in what it estimates will be a $94 billion market.

Analyst downgrades and investor sentiment

Bank of America downgraded Marvell from Buy to Neutral on Friday, cutting its price target to $78 from $90.

Analyst Vivek Arya cited weaker visibility into AI growth prospects and uncertainty around key projects.

Specifically, he highlighted potential delays in Microsoft’s Maia program, which could now launch closer to fiscal 2028, and reduced confidence in Marvell’s role in Amazon’s next-generation 3nm chip initiative.

The bank also revised its forecast for Marvell’s 2026 data-centre growth to the mid-teens percentage range, down from prior estimates of 23% to 25%.

Arya wrote that the company’s latest earnings call lacked the level of conviction about AI opportunities seen in previous quarters.

The combination of cautious guidance and analyst downgrades has fueled investor concerns that Marvell may struggle to keep pace with competitors in the rapidly expanding AI semiconductor market.

While management reiterated its long-term ambitions, short-term uncertainty appears set to weigh on sentiment.