Marvell Technology Faces Stock Sell-Off Amid Strong Earnings Growth

Chipmaker Marvell Technology‘s (NASDAQ: MRVL) situation took a downturn after it announced fiscal 2025 fourth-quarter results on March 5. Despite reporting solid revenue growth and favorable guidance for the upcoming quarter, shares have dropped more than 35% this year. The latest earnings report resulted in a nearly 20% decline in stock value, prompting some investors to take flight. Nevertheless, astute investors might focus on Marvell’s strengths, particularly its thriving data center business driven by significant demand for artificial intelligence (AI) chips.

Where to invest $1,000 right now? Our analyst team has discovered the 10 best stocks to buy right now. Learn More »

Before analyzing why investors might consider adding Marvell to their portfolios, it’s essential to understand the reasons behind the recent sell-off.

Marvell’s Stock Response Appears Overblown

Marvell’s fiscal Q4 revenue rose an impressive 27% year-over-year to $1.82 billion. Adjusted net income also increased by 30% to $0.60 per share, surpassing expectations. Despite an optimistic revenue guidance of $1.88 billion pointing to a remarkable 62% year-over-year increase, it fell short of the anticipated $2 billion mark from analysts.

Additionally, Marvell anticipates a substantial increase in its earnings per share, projecting $0.61 for the current quarter, which represents a 2.5x increase year-over-year. Under normal circumstances, such positive projections would prompt a stock surge. However, recent overall skepticism surrounding AI stocks may have triggered a panicked response from investors.

This stock sell-off creates an opportunity for discerning investors. Marvell is well-positioned to maintain strong growth throughout the current fiscal year and beyond. The company benefits from rising demand for application-specific integrated circuits (ASICs) used in AI servers.

Tech giants like Amazon, Microsoft, and Google are utilizing Marvell’s custom AI processors to reduce their reliance on Nvidia, aiming to cut AI infrastructure costs. Unlike general-purpose chips such as graphics cards, these custom processors deliver improved efficiency and performance for specific tasks.

Management noted on their latest earnings call that order volumes from AI customers are climbing. Furthermore, Marvell expects ongoing high-volume purchases driven by the impending launch of a new generation of processors. The company plans to initiate shipments for its custom AI processors to a brand-new customer in 2026.

This suggests the company’s data center division will likely continue thriving, following a robust last quarter where revenue surged by 88%. Sales of AI chips significantly exceeded the initial estimate of $1.5 billion. Data centers accounted for 75% of Marvell’s total revenue last quarter, underscoring their importance moving forward.

Marvell projects they will “significantly exceed our $2.5 billion target in fiscal 2026” from AI chip sales, indicating potential growth beyond analysts’ expectations.

Expect Strong Returns from Marvell’s AI Stock

Despite a difficult start to the year, Marvell Technology appears destined for remarkable growth in the upcoming quarter and beyond. The expansive custom AI processor market and Marvell’s position within it bode well for sustaining consistent revenue and earnings growth.

The chipmaker concluded the latest fiscal year with earnings of $1.57 per share. A look at projected earnings growth over the next three fiscal years reveals a promising trajectory.

MRVL EPS Estimates for Current Fiscal Year data by YCharts

Assuming earnings reach $4.65 per share in three years and the stock trades at 25 times earnings—similar to the tech-heavy Nasdaq-100 index multiple—Marvell’s stock price could rise to $116, reflecting a 70% gain from current levels. The potential for even greater gains exists, as the market might reward Marvell’s anticipated earnings growth with a premium valuation.

Capitalize on This Potential Investment Opportunity

Have you ever felt you missed the chance to buy leading stocks? If so, now may be your moment.

On rare occasions, our team issues a “Double Down” Stock recommendation for a company anticipated to surge. If you’re worried you’ve lost your opportunity, this is the ideal time to invest.

• Nvidia: If you had invested $1,000 when we doubled down in 2009, you’d have $282,016!*
• Apple: If you had invested $1,000 when we doubled down in 2008, you’d have $41,869!*
• Netflix: If you had invested $1,000 when we doubled down in 2004, you’d have $482,720!*

Currently, we are issuing “Double Down” alerts for three outstanding companies, and this may be a rare opportunity.

Continue »

*Stock Advisor returns as of March 10, 2025.

John Mackey, former CEO of Whole Foods Market and an Amazon subsidiary, serves on The Motley Fool’s board of directors. Harsh Chauhan has no positions in any stocks mentioned. The Motley Fool owns shares in and recommends Amazon, Microsoft, and Nvidia. The Motley Fool also recommends Marvell Technology and recommends options that include long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.