Marvell Stock: The Custom AI Chip Story Just Got Better
💡 Key Takeaway
Marvell's raised guidance and massive data center opportunity make it a compelling buy even after its 205% run, as it captures share in the custom AI chip market.
Marvell's Investor Day Surprise: Guidance Raised Again
Marvell Technology (MRVL) has been one of the best-performing AI stocks this year, with shares up about 205% as of writing. The company just gave investors even more reason to cheer at its recent Investor Day on October 6.
Management now expects revenue of $20 billion in fiscal year 2028, which is $2 billion higher than its previous guidance. That's a significant raise and signals that demand for Marvell's custom AI chips is accelerating faster than anticipated.
For the second quarter of fiscal year 2027, which ended August 1, Marvell reported record revenue of $2.7 billion, up 37% year over year. Non-GAAP net income per share came in at $0.94, up about 40% from the year-ago period.
The company also provided a long-term outlook that stunned analysts: by fiscal year 2031 (covering most of calendar 2030), Marvell expects sales between $70 billion and $90 billion, with its data center segment growing at a compound annual rate of 55% to 70%.
This optimism is rooted in Marvell's role as a key designer of custom AI chips, which are increasingly popular as alternatives to Nvidia's general-purpose GPUs. Custom chips can be more cost- and energy-efficient for specific AI workloads, and Marvell has partnered with Amazon on its Trainium chips, among others.
Why Marvell's Growth Story Has Legs
The raised guidance matters because it shows Marvell is not just riding the AI wave—it's gaining share in a market that is expanding rapidly. The company estimates its data center total addressable market will grow at a 50% compound annual rate through 2030, reaching $385 billion.
Even if Marvell hits the high end of its fiscal 2031 revenue target of $90 billion, it would have captured only about 23% of that opportunity. That leaves plenty of room for future growth, which is a key reason the stock could continue to climb.
Moreover, hyperscalers like Amazon are investing heavily in AI infrastructure. Amazon has indicated it has visibility into cloud demand through at least 2028, and its custom Trainium chips—designed with Marvell—could eventually be sold to external customers. That would open up another significant revenue stream for Marvell.
Of course, these are projections, not guarantees. But the combination of accelerating revenue growth, a massive addressable market, and strong partnerships makes a compelling case for Marvell's continued success.
At 63.3 times forward earnings, the stock isn't cheap. However, that valuation reflects the company's rapid growth trajectory. If Marvell delivers on its guidance, the premium multiple could be justified and even expand further.
Source: The Motley Fool
Analysis generated by Bobby AI quantitative model, reviewed and edited by our research team. This is not financial advice. Always do your own research before making investment decisions.
Bobby Insight
Marvell is a buy even after its huge run, as the custom AI chip market is still in its early innings and the company is a clear leader.
The raised guidance and massive addressable market show that Marvell's growth is sustainable. While the valuation is high, the company's accelerating revenue and earnings growth justify a premium. Risks include potential slowdown in AI spending, but current demand signals are strong.
What This Means for Me
