2024-07-15 07:44:28 ET
Summary
- Marvell Technology stock has lagged behind the S&P 500 since my last Buy recommendation.
- The company's Data Center segment performed well in Q1 FY 2025, but other segments dragged down total revenue.
- Its custom AI chip business is growing, with revenue expected to increase from two unnamed hyperscalers and another new customer in CY 2026.
- The company expects its Enterprise Networking and Carrier Infrastructure segments to rebound in 2025.
When I last wrote about Marvell Technology (NASDAQ: MRVL ) on January 22, 2024, I said, " The stock price will likely lag until its non-AI businesses stabilize and recover ." I also believed that its non-artificial intelligence ("AI") businesses probably wouldn't recover enough to make a difference until the fiscal year ("FY") 2026 and that investors with a time horizon of a year or less were taking a high risk. I still gave this stock a buy recommendation. However, I should have emphasized much more that this stock is a dollar-cost average candidate for buy-and-hold investors. Since I made the Buy recommendation, the stock is up only 2.96% versus the S&P 500 ( SPX ).
Marvell reported its first quarter FY 2025 results on May 30, 2024, confirming what I believed would happen. The Data Center segment, driven by AI growth, continued to perform excellently, while the non-AI business was lackluster. Marvell Chief Executive Officer ("CEO") Matt Murphy said on the company's first quarter FY 2025 earnings release , " Marvell delivered first quarter fiscal 2025 revenue of $1.161 billion, above the mid-point of guidance, driven by stronger than forecasted demand from AI. Our data center revenue grew 87% year over year, with the start of a ramp in our custom AI programs complementing our substantial base of electro-optics revenue. " ...
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For further details see:
Marvell Technology: Analyzing Potential Upside Of AI, Recovery Of Other Businesses