Marvell Shares Dip Despite Strong Revenue Growth and Outlook Increase

Marvell Technology experienced a notable drop in its stock value, with shares falling by 8% in premarket trading. This decline occurred even though the company reported second-quarter revenue that surpassed expectations and provided an optimistic, though ultimately insufficient, fiscal 2028 outlook.

The semiconductor manufacturer now forecasts an approximate 50% year-on-year revenue growth, projecting around $18 billion for fiscal 2028. This represents an upward revision from its previous forecast of $16.5 billion.

For the fiscal second quarter, Marvell's revenue saw a substantial 37% increase, reaching $2.7 billion. This figure exceeded the company's earlier guidance by $39 million.

Marvell, a key supplier of networking, connectivity, and custom chips essential for AI data centers, offered minimal specific details regarding its fiscal 2028 projections. This lack of comprehensive information contributed to a dip in investor confidence, particularly following recent hopes spurred by a potential Google partnership valued at up to $12.2 billion in shares.

At the time of reporting, the stock was down 8%. Year-to-date, Marvell's stock has shown impressive gains, climbing 184%, largely driven by the robust demand for its products used in artificial intelligence infrastructure.

Marvell's Chairman and CEO, Matt Murphy, attributed the company's strong performance to sustained high demand for its data center offerings, which experienced accelerated revenue growth of 46% year-over-year. Murphy further stated, "AI-related bookings remain exceptionally robust, and we expect our revenue growth to accelerate further through the remainder of fiscal 2027."

The recently announced Google agreement permits the technology giant to acquire up to 58.97 million Marvell shares at $206.58 per share, contingent upon meeting specific purchase targets through fiscal year 2033. This collaboration is set to encompass products that are compatible with Google's TPU systems, including AI inference chips, storage controllers, and network interface controllers.

Analysts at Goldman Sachs acknowledged the "high investor expectations" that preceded the quarterly report. In a note released on Thursday, they stated, "We believe investor expectations were elevated heading into the quarter based on robust spending at key customers, as well as the previously disclosed Google relationship."

Despite the results being an "incremental positive" for the stock, Goldman Sachs maintained a neutral stance on Marvell. The investment bank highlighted that Marvell's stock is currently trading at a higher valuation compared to its industry peers, and there remains a degree of uncertainty regarding its ability to secure additional custom-chip clients.