Marvell Technology’s Strong Q2 Forecast Driven by AI Demand

Marvell Technology has announced that it expects second-quarter revenue to exceed Wall Street estimates, propelling its focus on custom chips that power artificial intelligence (AI) workloads in data centers.

Robust Demand for Custom AI Chips

The company is witnessing a surge in demand for its custom AI chips, which is a significant contributor to its ongoing growth. In addition, strong order momentum is being seen in networking chips and electro-optics.

These advancements are crucial for hyperscalers, who are eager to scale their infrastructure to accommodate rising AI workloads.

Promising Financial Outlook

In its recent post-earnings call, Marvell management emphasized confidence in sustained AI tailwinds, driven by substantial spending from hyperscaler clients, new sovereign data center projects, and the expansion of emerging market players.

This optimistic outlook presents promising growth opportunities for the company moving forward.

Data Center Segment Performance

Marvell’s data center segment is a key area of strength, accounting for 76% of the company’s total revenue. In the first quarter, this segment generated revenue of $1.44 billion.

Moreover, the company’s carrier and enterprise networking segments are also showing signs of gradual recovery after a challenging period of inventory correction.

Market Trends and Future Predictions

Angelo Zino, an analyst at CFRA Research, predicts that the custom silicon business will be the primary growth driver over the next 3–5 years. He believes that it will contribute favorably to operating profits, despite potentially lower gross margins.

Upcoming Events and Insights

Zino also pointed out that an upcoming custom silicon webinar on June 17 could catalyze growth by outlining Total Addressable Market (TAM) expansion opportunities and new customer acquisitions expected in the 2026 fiscal year.

Challenges in Consumer Markets

Despite strengths in the data center segment, Marvell faces challenges in the consumer market, where revenue has dropped by 29% sequentially to $63.1 million due to declining gaming demand driven by seasonal factors.

The industrial segment also experienced a difficult quarter, with a 12% sequential decline in revenue.

Stock Market Response

In response to these announcements, Marvell’s stock fell about 2% in extended trading hours.

Second Quarter Projections

The company anticipates second-quarter revenue to be around $2 billion, with a variance of plus or minus 5%. This forecast compares favorably to analysts’ average projection of $1.98 billion, according to data compiled by LSEG.

Investor Day Postponed

In light of a “dynamic macroeconomic environment,” Marvell has announced the postponement of its previously scheduled investor day conference, further indicating caution in navigating market conditions.

Recent Financial Performance

Marvell reported revenue of $1.9 billion for the quarter concluding on May 3, surpassing analysts’ average estimate of $1.88 billion. This financial performance further underscores the company’s robust position in the market.

Conclusion

As Marvell Technology navigates the evolving landscape of AI and data center markets, its strategic focus on custom silicon and sustained demand from hyperscalers appear to set a promising trajectory for growth in the upcoming months.