Marvell Technology, Inc.’s MRVL shares have plunged 30.2% in the past month, underperforming the Zacks Electronics - Semiconductors industry, Zacks Computer and Technology sector and S&P 500 index’s decline of 24.5%, 16.2% and 12.2%, respectively.

This steep decline in the share price of this semiconductor leader raises the question: Should investors take advantage of this sharp decline and buy the dip? While the near-term challenges for Marvell Technology are real, the long-term growth prospects for the company remain intact, making a strong case for buying the stock at present.

Marvell One Month Price Performance

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Why Did Marvell Technology Underperform?

Marvell Technology’s recent decline stems from a mix of broader market weakness. A widespread sell-off in tech stocks, triggered by fears of rising trade tensions and slowing economic growth concerns, has put pressure on the entire sector, including Marvell Technology.

The U.S. government’s recent stance toward China has also been a matter of concern for Marvell Technology as the company generates significant revenues (about 43% of its fiscal 2025 total revenues) from the Chinese market.

Additionally, as Marvell Technology owns research and development facilities in China and outsources to China, the growing geopolitical tension, fear of fresh sanctions and persistent tariff threats have added to investors’ skepticism. However, given the MRVL’s strong fundamentals, investors’ concerns seem overblown.

Traction in Data Center and Networking Aids Marvell

Marvell Technology is gaining from hyperscalers’ increasing reliance on custom silicon for AI workloads. In fiscal 2025, MRVL’s artificial intelligence (AI) based revenues exceeded its $1.5 billion target, and Marvell anticipates to “very significantly” surpass its $2.5 billion AI revenue projections in fiscal 2026.

Marvell Technology’s custom AI silicon and electro-optics solutions have positioned it as a crucial player in the high-performance computing space. The company’s partnerships with leading hyperscalers ensure sustained growth. MRVL’s management is confident that revenues from its custom XPU (accelerated computing) products will continue expanding in fiscal 2027 and beyond.

Furthermore, as AI workloads grow, data centers require improved networking and interconnect solutions. Marvell is capitalizing on this shift with its high-speed optical interconnects, including 800G PAM, 400ZR DCI, and its industry-first 1.6T PAM DSP (digital signal processor), which reduces optical module power consumption by 20%.

Additionally, the transition from copper to optical connectivity in AI infrastructure represents a massive growth opportunity. Marvell’s Co-Packaged Optics technology and its development of the industry's first 2nm silicon IP for cloud and AI workloads solidify its position in next-generation networking.

With all these factors at play, the Zacks Consensus Estimate for Marvell Technology’s 2026 revenues is pegged at $8.3 billion, indicating year-over-year growth of 43.8%. The consensus mark for earnings is pegged at $2.76 per share, suggesting a whopping 75.8% year-over-year increase.

Marvell Technology beat the Zacks Consensus Estimate in each of the trailing four quarters, with an average surprise of 4.3%.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

Partnerships to Boost Marvell’s Growth

MRVL has established strong collaborations with industry leaders, including NVIDIA NVDA, Juniper Networks JNPR and Coherent Corp. COHR, to develop high-speed networking technology for AI workloads.

Marvell Technology and NVIDIA have partnered to integrate Marvell’s optical interconnect solutions with NVIDIA’s AI and computing technology. Using the NVIDIA HGX H100 eight-GPU platform, BlueField-3 DPUs, Spectrum-X networking, and Marvell’s interconnects, they have developed NVIDIA Israel-1 to power AI applications with high efficiency.

Marvell has collaborated with Juniper Networks and Coherent Corp. to develop 800ZR networking solutions. Together, these companies combined Juniper’s PTX10002-36QDD Packet Transport Router, Coherent’s 800ZR transceiver, and Marvell’s Orion 800G coherent DSP to develop a networking solution to support AI, cloud, and 5G.

MRVL’s Valuation Discount Creates an Attractive Entry Point

The recent drop in stock price has brought Marvell Technology to a forward 12-month price-to-earnings (P/E) multiple of 17.06X, significantly below its one-year median of 57.08X as well as the Zacks Electronics – Semiconductors industry’s average of 19.41X. This valuation discount makes MRVL an appealing buy for investors looking for exposure to AI and high-performance computing at a more reasonable price.

Marvell 12 Months (P/E) Valuation Chart

Image Source: Zacks Investment Research

Conclusion: Buy the Dip in Marvell Stock

While Marvell Technology is facing some near-term headwinds, including U.S.-China tension and the United States’ new tariff policies raising costs for Marvell, the company has strong fundamentals supported by its strong foothold in the data center and high-speed networking market. 

With the stock down nearly 30%, long-term investors should view this as a prime buying opportunity. As AI adoption accelerates, Marvell’s growth trajectory remains intact, making it a strong candidate for investment at current levels. MRVL carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here

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Juniper Networks, Inc. (JNPR) : Free Stock Analysis Report

NVIDIA Corporation (NVDA) : Free Stock Analysis Report

Marvell Technology, Inc. (MRVL) : Free Stock Analysis Report

Coherent Corp. (COHR) : Free Stock Analysis Report

This article originally published on Zacks Investment Research (zacks.com).

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