Marvell Technology (MRVL) saw its shares plunge by 18.60% recently after a disappointing forecast for the next quarter. Despite reporting a strong second quarter—with earnings of $0.67 per share and revenue of $2.006 billion—the focus quickly shifted to the future predictions, leading to a selloff.
In the last quarter, Marvell’s revenue was impressive, rising 58% compared to the previous year. Their data center segment stood out, with sales skyrocketing by 69% to $1.49 billion, making up nearly 75% of the company’s total revenue.
However, the outlook for the third quarter painted a different picture. Executives expect revenue to be around $2.06 billion, lower than analysts’ expectations of $2.11 billion. CEO Matt Murphy indicated that while demand for custom silicon remains strong—citing over 50 new AI design projects—the timing of new deployments could impact short-term performance.
Analysts reacted quickly. Bank of America’s Vivek Arya downgraded Marvell from Buy to Neutral, dropping the price target from $90 to $78. Others, like Quinn Bolton from UBS and Joseph Moore from Morgan Stanley, also reduced their price targets, showing caution due to uncertainties around major cloud initiatives from companies like Microsoft and Amazon.
Currently, Marvell’s stock is down more than 40% this year and is trading roughly 50% below its January peak of $126.06. Despite these challenges, the company generated $461.6 million in operating cash flow and maintained gross margins of 59.4%. Investors are now looking towards the fourth quarter to see if partnerships with tech giants like Amazon and Microsoft can revive growth.
Interestingly, even after the stock’s recent drop, analysts still consider Marvell a Strong Buy, with an average price target of $88.52—indicating a potential upside of over 40% from its current value. This mixed sentiment highlights a broader trend observed in the market: while many investors remain optimistic about AI and tech-related stocks, recent forecasts can sway opinions and trigger rapid stock movements.
For those interested, you can find more on analyst ratings and forecasts at trusted financial resources like TipRanks.
