Key Points
Nvidia (NASDAQ: NVDA) CEO Jensen Huang praised Marvell Technology (NASDAQ: MRVL) at the Computex event in Taipei, saying it has the potential to become the “next trillion-dollar company.” Following Huang’s comments on June 2, Marvell’s shares surged 32.5%, increasing its market cap to over $250 billion. Nvidia invested $2 billion in Marvell earlier this year.
Marvell’s connectivity business, especially its optical interconnects, is a major driver for its growth, projecting a 70% increase this year. Overall revenue is expected to rise 40% to nearly $11.5 billion. Despite the flourishing sectors, the target of achieving a $1 trillion valuation remains challenging given its current gross margin of around 52% and a forward P/E ratio of 70.5.
Marvell’s biggest customer is Amazon, utilizing its IP for the Trainium chip, although competition from AIchip may affect future collaborations. Additionally, the company provides IP for Microsoft’s Maia chips, boosting its business prospects despite potential concerns about its market role with Amazon.
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