Outside of Nvidia NVDA), Marvell Technology MRVL) will provide the semiconductor market’s most closely watched earnings report this week when it posts Q2 results after the closing bell on Thursday, August 27.
Marvell has become a prime beneficiary of the AI infrastructure boom through custom AI silicon, optical interconnects, and Ethernet switching, with hyperscale relationships involving Amazon AMZN), Microsoft MSFT), and Alphabet’s GOOGL) Google.
Adding to the anticipation is that Marvell’s stock has skyrocketed +180% this year, vastly outperforming Nvidia and the broader market. Even after the surge, however, MRVL is trading more than 25% below its 52-week and all-time high of $329 a share.
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Marvell’s Q2 Expectations
The Zacks Consensus Estimate calls for Marvell to post Q2 revenue of $2.71 billion, representing 35% growth from $2.01 billion in the prior year quarter.
Adjusted EPS is expected at $0.93, up nearly 39% from a year ago. Notably, these estimates are almost directly in line with Marvell’s guidance for Q2 revenue of $2.7 billion, plus or minus 5%, and adjusted EPS of $0.93, plus or minus $0.05.
More important than a modest Q2 beat may be Marvell’s outlook for continued AI-driven data-center growth. Data-center revenue reached $1.83 billion in Q1, rising 27% YoY and representing 76% of total sales, giving investors a high bar to measure against Marvell’s Q3 guidance and longer-term growth expectations.
Marvell’s Expanding Role in Hyperscaler AI
Marvell's AI opportunity has broadened considerably beyond its work with Amazon's custom Trainium chips and Microsoft's Maia accelerators.
Its newly expanded agreement with Alphabet covers custom silicon tied to Google's custom AI chip ecosystem of Tensor Processing Units (TPUs), including AI inference accelerators, storage controllers, network-interface controllers, and memory-related chips.
That puts Marvell in an increasingly important position as hyperscalers seek custom alternatives to Nvidia GPUs, although competition remains intense from Broadcom AVGO), Advanced Micro Devices AMD),and Astera Labs ALAB). Broadcom in particular remains a formidable competitor in custom AI silicon and has been a major Google TPU partner.
MRVL’s Premium Valuation Is Backed by Stellar Growth
The biggest argument against chasing Marvell stock before Q2 earnings is valuation. Following a massive year-to-date rally, MRVL trades at 17X forward sales and 74X forward earnings.
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However, the premium is backed by an exceptional growth outlook. Marvell expects total revenue to rise roughly 40% in its current fiscal 2027, followed by 45% growth in FY28 to around $16.5 billion. Notably, analyst expectations have moved even higher, with the Zacks Consensus now calling for FY28 sales of $16.63 billion.
More importantly, Zacks Consensus projections call for Marvell’s EPS to increase 42% in FY27, with a nearly 53% spike projected in FY28 to $6.18 per share.
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Bottom Line: Is MRVL Stock a Buy Before Q2 Earnings?
Marvell's valuation leaves little room for a disappointing Q2 report or softer guidance, especially after its tremendous YTD rally. Still, Marvell's expanding relationships with Amazon, Microsoft, and Google, combined with rapid growth across custom AI chips and data-center connectivity, make MRVL one of the more compelling ways to participate in hyperscaler AI spending beyond Nvidia.
Supporting that bullish outlook, Marvell stock currently sports a Zacks Rank #2 (Buy). Growth-oriented investors may still find MRVL attractive ahead of Q2 earnings, although the premium valuation makes the stock better suited for those comfortable with potentially significant post-earnings volatility.
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Marvell Technology, Inc. (MRVL): Free Stock Analysis Report
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This article originally published on Zacks Investment Research (zacks.com).