Marvell stock analysis: overvalued or undervalued?

Marvell Technology Inc (NASDAQ: MRVL) says continued strength in its custom AI chips business helped it beat Street estimates in its third financial quarter.

Shares of the semiconductor behemoth have more than doubled since early August – but Wall Street remains convinced that they still haven’t gotten ahead of themselves.

Analysts expect Marvell stock to extend its rally further in the coming year as it’s well-positioned to tap on the artificial intelligence tailwinds.

Marvell is in business with hyperscalers

Marvell has recently expanded its partnership with Amazon on artificial intelligence and data centre connectivity products.

The company based out of Wilmington, Delaware makes custom AI chips for Microsoft and Google as well.

Its business with hyperscalers positions it well to benefit from artificial intelligence that Statista expects will be a $1.0 trillion market over the next ten years.

In fact, AI has already started delivering a nice boost to the company’s top-line.

Its artificial intelligence related revenue in the third quarter was well over $500 million, as per UBS analyst Timothy Arcuri.

He’s convinced that MRVL will surpass its initial estimate of $1.5 billion in AI revenue this year and $2.5 billion in its fiscal 2026.

Marvell stock pays an additional dividend yield of 0.21% as well.

MRVL executives are confident about the future

Marvell saw continued momentum in electro-optics and ramped its custom ASIC/AI products substantially in its recently concluded quarter.

More importantly, the management expects that strength to last in the coming quarter as well.

MRVL forecasts $1.8 billion in revenue on 59 cents a share of adjusted earnings in its current fiscal quarter.

Analysts, in comparison, were at $1.65 billion and 52 cents per share, respectively.

According to Jefferies analyst Blayne Curtis, Marvell Technology can “maintain its [adjusted gross margin] at about 60% even with higher ASIC revenue.”

Heading into the earnings, he had a $110 price target – a level Marvell stock has already surpassed on Wednesday.

How high could Marvell stock go?

Among the more bullish Wall Street analysts is Harlan Sur of JPMorgan.

Sur sees upside in Marvell stock to $130 that indicates potential for another 8.0% upside from here.

“The company’s cyclical businesses are now inflecting higher and the AI/cyclical tailwinds will continue into CY25, and catalyse a multi-quarter period of positive EPS revisions,” the analyst told clients in a research note today.

Note that Marvell stands to benefit from Intel’s delays and competitive struggles, particularly in the data centre market.

Its custom chip designs and focus on ARM-based processors have helped them gain market share, especially as cloud providers seek alternatives to Intel’s x86 solutions and Nvidia’s supply-constrained processors.

Among other notable names who are bullish on Marvell Technology stock is famed investor and Mad Money host Jim Cramer.

The post Marvell stock analysis: overvalued or undervalued? appeared first on Invezz