Marvell Technology Q1 Earnings Preview: Investors 'Particularly Interested' In Company's AI Business, Second Half Growth

Semiconductor company Marvell Technology MRVL is set to report first-quarter financial results after market close on Thursday.

Here are the earnings estimates and what analysts are saying ahead of the quarter.

Earnings Estimates: Analysts expect Marvell to report first-quarter revenue of $1.18 billion, according to data from Benzinga Pro.

The company reported $1.32 billion in revenue in last year's first quarter. Marvell has exceeded analysts’ revenue estimates in eight of the last 10 quarters, including the past five consecutive quarters.

Analysts expect the company to report first-quarter earnings per share of 25 cents, compared to 31 cents reported in last year's first quarter.

The company has beaten analysts' earnings per share estimates in seven of the last 10 quarters, with the fourth quarter results coming in-line with estimates.

Marvell previously guided for first-quarter revenue to be $1.15 billion, plus or minus 5%. The company also guided for adjusted first-quarter earnings per share of 23 cents, plus or minus 5 cents per share.

Related Link: Hedge Funds Tweak Portfolios In Q1: Marvell, TD Synnex, AES Get More Love As Focus Shifts To AI

What Analysts Are Saying: Marvell could see the start of shipments of its AI ASICs to key customers like Amazon and Google, JPMorgan analyst Harlan Sur said in a new investor note.

The analyst, who has an Overweight rating and $90 price target, said the company could deliver a strong calendar year 2024 growth profile.

"The team's two large AI ASIC programs (Amazon Tranium 2 ASIC/ Google Axion ARM CPU) started production in the April-qtr and are commencing shipments here in the July-qtr with strong shipment outlook into the 2H and into CY25," Sur said.

The analyst also said the datacenter storage segments could show a recovery in the quarter and highlight growth for the "remainder of the year."

"We remain Overweight as we see the team's AI ASIC/Optical/cloud/storage segments more than offsetting the current 5G/enterprise headwinds."

A potential 20% quarter-over-quarter sales decline in the first quarter could be the bottom for Marvell in the current cycle, Rosenblatt analyst Hans Mosesmann said.

"We expect slight growth into the July quarter, which is more modest than the consensus ~6% q/q growth," Mosesmann said. "This is based on our observation that the company is experiencing a more gradual non-AI recovery with more stable seasonal patterns in the latter half of the year."

The analyst said investors are "particularly interested" in Marvell's AI business, which makes up over 50% of sales.

Key Items to Watch: The earnings report from Marvell comes as questions remain when the company will see growth again.

Shares of Marvell were hit after fourth-quarter financial results as the company's guidance disappointed investors.

"While we are forecasting soft demand impacting consumer, carrier infrastructure, and enterprise networking in the near term, we expect revenue declines in these end markets to be behind us after the first quarter, and project a recovery in the second half of the fiscal year," Marvell CEO Matthew Murphy said after Q4 earnings.

Based on the commentary from analysts, the first quarter could mark the bottom for the company, with growth coming in the second half of the year.

While many semiconductor stocks like Nvidia have increased in value in 2024, the gains of Marvell are in parallel with the popular iShares Semiconductor ETF SOXX. The ETF is up 24.2% year-to-date and up 68.7% over the last year. Marvell shares are up 28.4% year-to-date and up 68% over the last year.

Marvell is the 14^th largest holding in the ETF at 3.9% of assets, while Nvidia is first at 9.8%.

MRVL Price Action: Marvell shares are up 1% to $77.46 at the time of publication Tuesday, versus a 52-week trading range of $46.07 to $85.76.

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