By Adam Clark
Marvell Technology was diving on Friday. The artificial-intelligence chip company is struggling to live up to hopes for its custom AI hardware.
Marvell shares were down 14% at $66.75 in premarket trading. On the face of it, that's a strange reaction to an earnings report late Thursday where it swung to a profit and reported a 58% rise in revenue, but the focus was on its guidance which fell short of expectations amid weakness in its vital data-center segment.
Marvell surged along with peer Broadcom when investors bet that its clients -- including Amazon.com and Microsoft -- would spend heavily on its custom AI chip designs as alternatives to Nvidia hardware. However, the stock has been volatile as Marvell struggles to convince the market it can win long-term deals.
"With [Marvell's] AI revenue going down near-term, investors are unlikely to pay for anything unproven. Furthermore, with Nvidia suggesting 50% AI growth next year and Broadcom growing AI at least 60%, Marvell's 30% or so suggests it isn't gaining share yet," wrote Melius Research analyst Ben Reitzes in a research note.
Reitzes has a Hold rating and $70 target price on Marvell stock.
Questions continue to swirl around Marvell's relationship with its largest custom AI chip customer, Amazon, and whether it is losing out on business with the online retailer and cloud-computing company to Taiwan's AIchip Technologies.
"While Marvell's near-term opportunity with its leading customer Amazon may be smaller in future generations (as it cedes share to Taiwanese competitor Alchip), the silver lining may be that Marvell may evolve its ASIC business into a more diversified and resilient growth business," wrote William Blair analyst Sebastien Naji in a research note.
Naji has an Outperform rating on Marvell stock, noting the company's management reiterated confidence in reaching a fiscal 2029 target of 20% share of a $94 billion market.
Marvell reported a profit of 22 cents a share for its quarter ended in early August on revenue of $2.01 billion. It expects current-quarter revenue to be $2.06 billion, plus or minus 5%, while analysts had forecast $2.11 billion.
The company said its current-quarter adjusted earnings per share are set to come in at 74 cents, plus or minus five cents, compared with the 72 cents Wall Street was expecting.
Write to Adam Clark at adam.clark@barrons.com
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August 29, 2025 08:25 ET (12:25 GMT)
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