Marvell Technology (MRVL) stock has started recovering after it got caught up in the recent AI selloff. After spending most of last week in the red, shares have been climbing this week. Including this morning gains, MRVL stock is up about 6% for the week, joining a broader rebound in semiconductor stocks after a tough period for the sector.
At its Oct. 6 Investor Day, the chipmaker raised its revenue goals and shared plans to become a bigger supplier of AI infrastructure. Marvell's custom AI chips, data center connectivity business, and improving growth outlook are three reasons why analysts believe this rebound has staying power.
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www.barchart.com 1. Marvell's Custom AI Chips Could Become a Much Bigger Business
The AI chip race is moving beyond standard GPUs. Big cloud companies are now creating processors that fit their specific needs, aiming for better performance, lower power use, and reduced costs. Marvell makes custom chips for these companies, so it stands to gain as more data centers use proprietary AI processors.
At its Investor Day, management raised its custom-chip revenue target for fiscal 2029 to more than $12 billion, up from the previous goal of more than $10 billion. The company now expects custom revenue to more than triple by 2029, thanks to anticipated growth in programs for large cloud customers. Although these are just goals for now, this upgraded outlook shows just how confident management feels about the business. Marvell's expanded Google partnership is another reason to be bullish. If Marvell reaches certain milestones, its expanded partnership with Alphabet's (GOOG) (GOOGL) Google could bring in as much as $120 billion in sales by fiscal 2033. This suggests Marvell’s custom-chip business is becoming more important as cloud providers seek processors built for their needs.
2. Connectivity Is Emerging as a Second Major Growth Engine
AI requires more than computing power, and it is becoming a new growth area for Marvell. Large AI clusters rely on fast connections between chips, servers, and racks, which increases the need for optical interconnects, digital signal processors, and networking technology. Marvell provides solutions across these areas and supports the wider AI infrastructure, not just processors.
In the second quarter of fiscal 2027, Marvell made $2.17 billion from data center revenue. This was a 46% increase from the year-ago quarter and made up 79% of the company’s total sales. During the investor day event, management also attributed the fiscal 2028 revenue target to connectivity. This indicates that the company's higher expectations are not based solely on one custom-chip opportunity. Management also highlighted opportunities in faster optical networking, including 1.6-terabit and future 3.2-terabit technologies, as AI data centers require increasingly high-speed connections.
3. Wall Street Has a Much Bigger Growth Story to Consider
Also at its Investor Day, Marvell made a bold move by raising its long-term targets. The company now aims for revenue between $70 billion and $90 billion, with $80 billion as the midpoint. For comparison, Marvell’s fiscal 2026 revenue was $8.2 billion. To hit the midpoint, Marvell would need to grow its annual revenue to nearly ten times its 2026 level within just five years. Management now estimates that its total addressable market could reach about $400 billion by 2030, four times its earlier estimate. This shows why management believes the company can grow significantly without relying on just one new product or customer.
The company is focused on more than just revenue growth. For fiscal 2031, Marvell aims for gross margins between 56% and 59%, operating margins of 44% to 46%, free cash flow margins above 36%, and adjusted EPS over $30 at the midpoint of its revenue forecast. Management said these targets reflect current customer relationships, recent design wins, ongoing development programs, and plans to secure supplier capacity before demand increases. Marvell’s ability to meet these goals will depend on how well it executes.
Wall Street responded to Marvell’s long-term outlook by raising its price targets. TD Cowen upgraded Marvell to “Buy” with a $350 target, while Piper Sandler, Needham, and Bank of America subsequently raised their targets to $400. Meanwhile, Oppenheimer and RBC Capital increased the target price to $425.
Despite the broader AI selloff, MRVL stock has climbed 169% so far this year. The average target price for the stock is $337.05, pointing to a possible 42% gain. Jefferies has assigned the highest estimate of $450, which would mean a potential 90% rally from current levels. Overall, most analysts are still strongly bullish about MRVL stock. Out of 39 analysts, 30 rate it as a “Strong Buy,” three call it a “Moderate Buy,” and six rate it a “Hold.”
The Bottom Line on MRVL Stock
Marvell has set a bold financial target, raising expectations. Its stock trades at 56 times projected 2027 earnings, so investors are paying a premium for the hope of higher growth in the future. This also puts MRVL stock at risk if growth slows or the company does not meet its lofty goals. The recent rebound is an encouraging sign, but the next earnings reports will show whether the company is making progress toward management's goals.
www.barchart.com On the date of publication, Sushree Mohanty did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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