Marvell stock could soar 410% and reach a $1 trillion valuation, Jensen Huang says

Marvell Technology stock price has gone parabolic and moved to a record high, helped by the ongoing artificial intelligence boom and demand for custom chips. MRVL jumped to $225, up by 370% from its lowest point in April last year. So, will the surge continue as Jensen Huang predicts it will be the next $1 trillion company?

Jensen Huang believes Marvell Technology stock can jump 410%

Marvell Technology stock has jumped sharply in the past few months, and Nvidia’s Jensen Huang believes that it has more upside to go. He believes that its market capitalization will jump to $1 trillion, which would represent a 410% surge from the current level. NVIDIA invested $2 billion in Marvell Technologies earlier this year.

The statement came a week after Marvell published strong financial results, which were boosted by its custom chips business. Its revenue surged by 28% in the first quarter to $2.4 billion, with the management predicting that its revenue will accelerate in the second quarter, driven by its data center business. Data center revenue jumped by 27%

Marvell’s revenue growth was also driven by its acquisition of Celestial AI in a $3.25 billion deal. This buyout integrated Celestial’s Photonic Fabric optical interconnect technology into Marvell’s data center business. Most recently, Marvell acquired Polariton, strengthening its optical technology portfolio.

Marvell expects that its second-quarter revenue growth will accelerate. It predicts that this business will grow by 12% from the first quarter and by 35% YoY to $2.7 billion. Most importantly, its full-year revenue is expected to grow by 40%. It sees its data center revenue growing by 70% YoY.

Valuation concerns remain

Still, the biggest concern for the Marvell Technology stock is its valuation, which remains substantial. Data compiled by Seeking Alpha shows that it trades on a GAAP price-to-earnings ratio of 113.76, much higher than the S&P 500 average’s 23. Its non-GAAP PE ratio of 50 is also higher than the sector median of 36. 

In theory, one should be careful when investing in highly overpriced securities like Marvell. However, in some instances, highly overvalued companies tend to do better than bargain ones, especially when they have a catalyst. 

One thing, though. Some metrics suggest that Marvell is actually not all that overvalued. For example, adding its net profit margin of 29% to its forward revenue growth of 40%, gives a Rule-of-40 multiple of 69%, which is great. 

Also, while its PE multiple is high, the PEG ratio, which includes its growth, stands at 1.22, lower than the sector median of 1.41. Its five-year average was 1.50.

Marvell stock price technical analysis

MRVL stock chart | Source: TradingView

The weekly chart shows that the MRVL stock price has surged in the past few months and now stands at its all-time high. It has formed a bullish engulfing pattern, suggesting that it has more gains to go.

The stock has remained above all moving averages. For example, the 100-week moving average stands at $94, much lower than the current $220. The stock has become highly overbought, with the Relative Strength Index (RSI) hitting 91. Also, the Stochastic Oscillator has continued soaring. 

Therefore, while the Marvell Technology stock will likely continue rising, there is a risk that it will pull back, potentially to $200 and below in the near term, amid the ongoing profit-taking.