The AI market is getting harder to read. Some companies are turning enormous AI spending into explosive growth, while investors are questioning whether that spending can keep delivering the same returns.
Investors often circle earnings dates on their calendars, but Marvell Technology (MRVL) is heading into a key event next week that could shed light on where the company goes from here. Marvell will hold its Investor Day on Oct. 6, where CEO Matt Murphy and members of the senior leadership team are expected to discuss the company’s strategy, growth opportunities, and role in AI and data center infrastructure.
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The company has already raised its expectations for both fiscal 2027 and fiscal 2028. Now, investors will be looking for more detail on what is driving that growth, particularly in custom silicon and AI connectivity, and whether Marvell’s longer-term opportunity can support the much higher expectations already built into its outlook.
www.barchart.com Marvell Already Raised the Bar
Marvell Technology makes the specialized chips and connectivity technologies that power data centers, especially those running AI workloads. In the second quarter of fiscal 2027, Marvell’s revenue grew 37% year over year to $2.7 billion. Data center revenue was even stronger, climbing 46% from the year-ago quarter to $2.17 billion. Marvell stock has skyrocketed almost 200% year-to-date, wildly outperforming the broader market gain.
After another strong quarter, management raised the outlook, expecting third-quarter revenue of $3.15 billion at the midpoint, representing about 15% sequential growth and over 50% YOY growth. Marvell also lifted its full-year fiscal 2027 revenue expectation to roughly $12 billion, or 45% growth from the previous year. The fiscal 2028 estimate is even higher, at $18 billion. The company also expects data center revenue to increase by more than 60% in fiscal 2028.
During the Investor Day event, management doesn’t need to convince investors that AI demand exists. But investors will expect to know how Marvell plans to turn today’s AI demand into years of growth.
Custom Silicon Could Be the Part Investors Are Awaiting
Marvell’s custom business could be one major piece of that story. Its specialized chips give it exposure to hyperscalers that want increasingly customized infrastructure for AI workloads. This is the reason it expects custom silicon to accelerate significantly in the second half of fiscal 2027, pushing custom revenue to more than double by fiscal 2028.
Google (GOOGL) is one of Marvell’s hyperscale partners that could help in this segment. Marvell has signed a commercial agreement to supply Google with custom semiconductor products, including AI inference accelerators, storage controllers, networking interfaces, memory interfaces, and near-memory computing connected with its TPU ecosystem. Through this deal, Google has received a warrant to buy up to roughly 59 million Marvell shares at $206.58 each. However, the shares are largely tied to revenue milestones, meaning Google can unlock more of this potential investment as it buys more qualifying custom chips from Marvell.
Management has already said the new Google relationship increases the longer-term opportunity for custom silicon but hasn’t put a specific number on the impact. The Investor Day event could give investors an idea of how big Marvell's custom-silicon opportunity could get.
Marvell also has an important partnership with Nvidia (NVDA), which has invested $2 billion in the company. The partnership allows customers to develop semi-custom AI infrastructure connected to the Nvidia ecosystem through Nvidia's NVLink Fusion platform. Management expects this partnership will broaden the addressable market for its custom silicon and high-speed connectivity.
Furthermore, Marvell’s connectivity business is an equally big AI opportunity. The company is developing products spanning optical DSPs, switching, data-center interconnects, and newer optical architectures, as the market moves towards faster connections. Marvell has been expanding its 1.6T optical portfolio and recently unveiled its new 2 nm optical technologies, including 400G-per-lane PAM4 and 800G and 1.6T coherent solutions.
As AI systems become more demanding, these technologies are aimed at increasing bandwidth while controlling power consumption. This is a long-term opportunity because the AI infrastructure buildout is creating bottlenecks beyond just compute.
What Investors Should Be Looking For on Oct. 6
The first thing to watch is whether Marvell provides more detail on the path towards $18 billion in fiscal 2028 revenue, which management raised sharply. Investors may want to understand how much of that will come from custom silicon, connectivity, switching, and other data center businesses. The second is the longer-term custom opportunity. Marvell's CFO has previously discussed a potential $10 billion-plus custom business in fiscal 2029. During the Q2 earnings call, the company mentioned providing a more detailed view extending toward the end of the decade on Investors Day. The third is margins and cash generation. Although revenue growth is impressive, investors will still want to see how much of that growth can translate into operating leverage and cash flow.
The most important thing for investors now is how much of today's AI infrastructure boom Marvell can turn into a multiyear growth story. That’s the answer they will be looking for.
On Wall Street, MRVL stock holds a consensus “Strong Buy” rating. Out of the 38 analysts covering shares, 28 have a “Strong Buy,” three have a “Moderate Buy” recommendation, and seven suggest a “Hold” rating. Marvell stock is trading 9.3% below its average price target of $293.08. However, the high target price of $400 implies a potential upside of 49% from current levels.
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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