Marvell Technology Posts Solid Q3 Beat: Analysts Raise Forecasts, Expect 40%-50% Earnings Growth

Shares of Marvell Technology Inc MRV climbed in early trading on Wednesday, after the company reported upbeat earnings for the third quarter.

• Bank of America Securities analyst Vivek Arya maintained a Buy rating, while raising the price target from $108 to $125.
• Stifel analyst Tore Svanberg reiterated a Buy rating, while raising the price target from $114 to $125.
• Goldman Sachs analyst Toshiya Hari reiterated a Buy rating, while raising the price target from $87 to $115.
• Oppenheimer analyst Rick Schafer maintained an Outperform rating, while raising the price target from $110 to $125.
• KeyBanc Capital Markets analyst John Vinh reaffirmed an Overweight rating, while raising the price target from $95 to $125.
• Piper Sandler analyst Harsh Kumar maintained an Overweight rating, while raising the price target from $100 to $120.
• Cantor Fitzgerald analyst Quinn Bolton maintained a Buy rating, while raising the price target from $95 to $120.

Check out other analyst stock ratings.

BofA Securities: Marvell Technology presents "a unique investment in AI electro-optics and custom chips," Arya said. It also has more than 75% data center exposure, and is well positioned to drive 40%-50% annual earnings growth for the next several years.

The company delivered a strong beat and raise quarter, the analyst stated. "We see upside to both MRVL’s custom chip ramp and to its operating margin," he wrote.

Stifel: Marvell delivered its quarterly results at the high-end of its guidance, Svanberg said. Data center and AI revenues grew by 25% sequentially "on significant custom silicon ramps, proving out mgt.'s prescient strategic focus years ago," he added.

The company raised its guidance for the January quarter, "on further DC/AI acceleration while non-DC segments continue their cyclical recovery," the analyst wrote. Marvell's ASIC business could generate $8 billion to $10 billion over the next 10 years.

Goldman Sachs: Marvell reported revenues of $1.52 billion, 4% higher than consensus. Hari said. Marvell guided to fourth-quarter revenues to $1.8 billion, representing 26% year-on-year growth at the midpoint and coming in 9% above Street consensus, he added.

The company expects all business segments to grow sequentially, the analyst stated. "Importantly, we expect robust topline growth to translate into strong margin and earnings expansion supported by the operating leverage inherent in Marvell's business model," he further wrote.

Oppenheimer: Marvell reported its third-quarter sales and earnings higher than consensus by 4% and 5%, respectively. "More impressively, F4Q (Jan.) guided 9%/13% ahead of Street led by accelerating custom AI ASIC and networking," Schafer said.

Data center and AI revenues could grow by more than 50% next year, the analyst stated. "In our view, custom ASIC could approach $4B in CY25, roughly 2x investor expectations," he further wrote.

KeyBanc Capital Markets: Marvell reported revenues of $1.52 billion, higher than consensus of $1.46 billion, and earnings of 43 cents per share, topping expectations of 41 cents per share, Vinh said. The company guided to fourth-quarter revenues of $1.8 billion, higher than consensus of $1.65 billion, and earnings of 59 cents per share, higher than consensus of 52 cents, he added.

The upside was driven by "significant volume ramp of AI custom ASICS," with Data Center revenues growing almost 100% year-on-year, the analyst stated. "MRVL reiterated plans to significantly exceed its FY25/FY26 AI rev targets of $1.5B/$2.5B with FY25 exceeded by several hundred millions of dollars," he added.

Piper Sandler: Marvell indicated that data center growth was driven "predominantly by the step up of the custom AI silicon ramp," Kumar said. Further commentary suggested that AI revenues are tracking ahead of the company's original target of $1.5 billion and $2.5 billion for this year and next year, respectively.

"From an end market perspective, data center, carrier, and consumer outperformed expectations, while networking missed expectations and auto/industrial was roughly in-line with the Street," the analyst wrote. He expressed optimism around tailwinds in custom ASICs continuing into next year.

Cantor Fitzgerald: The company expanded its strategic relationship with Amazon.com Inc's AMZN AWS business, "through a five year, multi-generational agreement that includes collaboration across multiple AWS products," Bolton said. As part of the agreement, AWS will acquire up to around 4.2 million of Marvell shares with an exercise price of $87.7706 per share, he added.

The company reported strong results and guidance, with the Data Center segment continuing to outperform. "Next year, both custom AI silicon and electro-optics are expected to grow meaningfully, leading to significant upside to our prior estimates," he further wrote.

Price Action: Shares of Marvell had risen by 21.44% to $116.47 at the time of publication on Wednesday.

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