Marvell surges on AI, Huang investment; valuation questions

Marvell Technology shares climbed to $308 on Monday, up 233% year-to-date and 350% over the past 12 months. The rally follows increased demand for AI-related chips and a $2 billion stake by NVIDIA CEO Jensen Huang; his public comments on June 1 coincided with a large upward gap in the stock price.

Marvell’s largest customers-Amazon, Microsoft, Google and Meta-account for roughly 80% of company revenue. Annual revenue rose from about $4.46 billion in 2022 to more than $8.1 billion last year. In the most recent period, year-to-date revenue growth was about 28%, with the data center segment at $1.83 billion and the communications business above $585 million.

Company management projects AI-driven demand will support growth through fiscal 2028. Management expects fiscal 2027 year-over-year revenue growth of more than 40%, with the data center business growing roughly 50%.

Wall Street consensus models show revenue near $11.5 billion this year and about $16.6 billion next year, implying annual growth around 40% for the next two years. Marvell has expanded its product set and capacity through acquisitions, including the $3.25 billion purchase of Celestial AI and the acquisition of Polariton, an optical scaling technology firm.

Analysts point to a forward price-to-earnings ratio near 70. By comparison, some industry peers have forward multiples below 25. Several analysts maintain price targets below the current share price: Rosenblatt Research (Kevin Cassidy) at $240, Oppenheimer (Rick Schafer) at $250, and firms including TD Cowen, Cantor Fitzgerald, KeyCorp and Needham with targets under $300.

Technical indicators show the stock trading well above short-term averages, with the 50-day exponential moving average near $198 and the 100-day EMA around $160. The June 1 price gap has been noted by market participants and may influence short-term price movement.

Market participants say upcoming quarterly results, customer order patterns and the progress of recent acquisitions will be watched for signs that revenue and profit growth can align with current valuation levels.