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Marvell Technology Inc. had a tough act to follow this week, reporting the day after Nvidia Corp. blew Wall Street’s collective mind with billions of dollars more in data-center sales than analysts had expected.
Marvell
MRVL,
didn’t deliver the sorts of results Nvidia did, and that showed in the stock’s selloff Friday.
Marvell shares fell nearly 9% Friday to an intraday low of $52.25, after the chipmaker, which has a data-center presence, reported a slight beat on earnings and offered an in-line forecast.
The company’s data-center sales fell 29% to $459.8 million in the latest quarter, though they exceeded the $439.9 million FactSet consensus. By contrast, Nvidia posted data-center sales a day earlier that were more than $2 billion above what Wall Street expected.
TD Cowen analyst Matthew Ramsay said Marvell’s report was “about what we expected as AI-driven upside is offset by weakness in other segments.” Still, Marvell needed stronger numbers to impress investors still dazzled by Nvidia’s epic results, as a “lack of material numbers upside last two quarters” likely left investors wanting, the analyst said.
“It’s no Nvidia, but nobody is,” Ramsay said in a Friday note. “While results were solid, we note that many investors were likely left disappointed by the lack of significant upside, given both tone and actual attach to Nvidia systems following that company’s results and guide,” Ramsay said.
He gave the stock an outperform rating and a $65 price target.
Read: Arm IPO: 5 things to know about the chip designer central to the AI transition
Mizuho desk analyst Jordan Klein said that even though Marvell’s forecast was “underwhelming,” AI sales were larger than expected.
“No one really expected Marvell to guide or sound anywhere close to Nvidia,” Klein said, adding that the “key positive and upside was much better AI [revenue]. Marvell said he now sees the potential to reach $800 million in AI sales by the end of the current year.
Susquehanna Financial analyst Christopher Rolland said “Marvell’s Inphi was the star of the show,” referring to such products as PAM4 digital signal processors used in cloud data-centers, which the company got through its 2020 acquisition of Inphi.
Rolland said that Marvell increased its AI-related revenue forecast from $400 million to “something higher,” possibly $550 million this year, as the company expects to exit at around $200 million per quarter. That suggests that next year’s $800 million estimate was too low.
He set a positive rating and a $70 price target on the shares.
Read: Why Nvidia’s AI bonanza may have only just begun
Of the 30 analysts who cover Marvell, 27 have buy ratings on the stock, and three have hold ratings. Of those, seven raised their price targets, while one lowered theirs, resulting in an average price target of $70.94, up from a previous $70.27, according to FactSet data.
Even with Friday’s selloff, Marvell shares are still up 44% on a year-to-date basis, compared with a 37% gain in the PHLX Semiconductor Index
SOX,
a 14% rise by the S&P 500
SPX
and a 29% surge by the tech-heavy Nasdaq Composite
COMP
over the same span.
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