By Adam Clark

Marvell Technology might be the most unloved of the artificial-intelligence chip players. Its latest earnings probably won't change that, but analysts are warming up to the idea it could be too cheap to ignore.

Marvell surged along with peer Broadcom when investors bet that its clients -- analysts think they include Google parent Alphabet, Amazon.com, and Microsoft -- would spend heavily on its custom chip designs as alternatives to Nvidia hardware.

Since then, though, Marvell has been dogged by worries that it might lose out on designing the next generation of Amazon's Trainium AI chips.

The stock is down 42% this year trading and was dropping more after its first-quarter earnings, which came after Thursday's close. Shares were down 6.6% at $59.50 on Friday.

Marvell's crucial data-center segment grew at 5.5% from the previous quarter. By comparison, Nvidia's growth for its data-center operations was 10%.

So, the natural question remains: Just how much business is the company getting from Amazon, compared with rivals such as Nvidia and Taiwan's AIchip Technologies.

Marvell commented on its "lead XPU program for a large US hyperscale data center customer," which KeyBanc analyst John Vinh pointed to.

"Mgmt indicated that it remains engaged with AWS [Amazon Web Services] on Trainium 3 and 4," wrote Vinh in a research note. "Marvell also acknowledged AWS may be pursuing a dual-sourcing strategy."

Vinh kept an Overweight rating on the stock but lowered his target price to $90 from $115, representing a price-to-earnings multiple of 25 times his forecast for the company's fiscal 2027 earnings.

Investors might ask: Why opt for Marvell when AI chip champion Nvidia keeps putting up stellar growth at relatively undemanding valuation?

Marvell stock probably will need a catalyst to get more attention. If Amazon is a lingering question mark, Microsoft could be an alternative driver because it is working on its own custom chips.

Benchmark Research analyst Cody Acree weighed in on an unnamed Marvell customer that he thinks is Microsoft.

"Marvell continues to make solid progress with the new design win for a custom AI XPU with an additional US hyperscaler, which we believe to be for Microsoft's MAIA XPU accelerator," Acree wrote. "With several key milestones completed, the company believes it is well on track to meet its customers' target to start production in calendar 2026."

Acree reiterated his Buy rating and $95 target price.

Another possible catalyst for the stock could be a Marvell event next month. The company is planning a June 17 webinar focused on the future of custom silicon technology for AI infrastructure. It postponed its Investor Day from June 10 to an unspecified date in 2026.

"We expect the multiple to re-expand and still believe the stock can command a solid multiple and we also expect an improvement in sentiment post the custom ASIC day in a few weeks," wrote UBS analyst Timothy Arcuri, who has a Buy rating and $100 target price.

Write to Adam Clark at adam.clark@barrons.com

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May 30, 2025 11:23 ET (15:23 GMT)

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