Marvell Technology Reports Third Quarter Financial Results: What Analysts Are Saying
Marvell Technology, a leading semiconductor company, recently released its third quarter financial results after the market closed on Thursday. The report has garnered attention from analysts, who have shared their insights on the company’s performance and what lies ahead.
According to Oppenheimer analyst Rick Schafer, Marvell is experiencing an uptick in orders for artificial intelligence (AI) related products, which could be a significant boost for the company. Schafer stated, “Cloud AI order velocity continues to increase as CSPs scale out AI server deployments.” He also mentioned that traditional server rebounding and new products are expected to drive “significant growth” in Marvell’s data centers segment in 2024. Schafer predicts that AI revenue for the data center segment could exceed $800 million in 2024, thanks to Marvell’s unique position in the DC AI market.
Benchmark analyst Cody Acree highlighted Marvell’s data center AI and cloud demand as the standout factors in the company’s third quarter performance. Acree believes that Marvell is well-positioned to benefit from the tech sector’s rapid adoption of AI. He also mentioned that increased AI adoption and spending from companies are likely to drive upside for Marvell, advising investors to use any share price weakness as an opportunity to build positions.
Piper Sandler analyst Harsh Kumar acknowledged the strength of Marvell’s data center segment but noted that other segments are suffering. Kumar stated, “Overall, roughly half of the business in the January quarter will be underwater from a growth perspective, including a significant downtick in the carrier space.” Despite this, Kumar mentioned that the data center segment is showing strong trends, which could offset the weaknesses in other segments.
KeyBanc analyst John Vinh also recognized the strength of Marvell’s AI segment in the third quarter, although other segments experienced weakness. Vinh expects Marvell’s AI business to exceed its prior outlook of $200 million and track above its long-term revenue target of $800 million in FY25/FY26. He also mentioned that Marvell is on track to start volume production next year for several AI items.
Needham analyst Quinn Bolton agreed with the hype surrounding Marvell’s AI capabilities, stating that cloud and AI revenue is growing faster than expected. However, Bolton noted that the strength in AI and data center did not fully offset the weaknesses in other reporting segments. He mentioned that the data center business was largely responsible for the revenue beat in the third quarter and will be the sole growth segment in the fourth quarter.
Goldman Sachs analyst Toshiya Hari had a mixed view of Marvell’s performance. While he acknowledged that the third quarter results were a mixed print and that the fourth quarter guidance underwhelmed, Hari maintained a Buy rating on Marvell. He sees Marvell as a key enabler of high-speed data center connectivity and a beneficiary of the ongoing built-out of AI infrastructure. Hari also believes that Marvell’s high-margin merchant businesses will see improving fundamentals, and the long-term outlook for its custom computer business remains promising.
Despite the varied opinions from analysts, Marvell’s stock price has seen a decline of 5% to $53.20 at the time of publication on Friday. However, the stock has had a strong performance throughout the year, with a 55% increase year-to-date in 2023.
In conclusion, Marvell Technology’s third quarter financial results have generated mixed reactions from analysts. While the company’s data center AI and cloud demand have been praised, other segments have faced challenges. The future of Marvell Technology largely depends on its ability to capitalize on the growing AI market and overcome obstacles in other segments. Investors will be closely monitoring the company’s progress in the coming months.
