Marvell Technology Inc. NASDAQ:MRVL is a leading semiconductor company in the computer and technology sector that designs and manufactures high-performance chips. They are a powerhouse when it comes to their largest market, addressing data infrastructure and data center solutions. While the company is a benefactor of the artificial intelligence (AI) boom and explosive growth in data centers, it can be seen as one-dimensional, as evidenced by the 10% drop in shares in reaction to its fiscal Q1 earnings report. 2025.
Marvell faces stiff competition from its peers, including Broadcom Inc. NASDAQ:AVGO, Sináptica Inc. NASDAQ:SYNA It is STMicroelectronics NV NYSE:STM.
The good: Explosive TAM growth in data centers of more than 300% by 2028.
Marvell generates 70% of its revenue from the data center segment. The boom in demand for AI infrastructure and scorching growth in data centers led to an 87% year-over-year and 7% sequential increase in its data center revenues to $816.4 million in its earnings report. fiscal first quarter 2025 earnings. Robust growth was driven by cloud AI and electro-optical cloud infrastructure products, as well as initial shipments of its custom AI computing programs.
Marvell expects to double its 10% market share in the coming years.
Data center revenue is expected to grow sequentially in the mid-single digits as they ramp up production of custom AI silicon. The data center total addressable market (TAM) is expected to more than triple, growing from $21 billion last year to $75 billion in 2028. With the countless opportunities in interconnection, switching, storage and compute, Marvell expects to double its 10% market share in the coming years.
Marvell is believed to be working on application-specific integrated circuit (ASIC) chips with hyperscaler giants Amazon.com Inc. NASDAQ:AMZN on its 5nm Tranium chip, Alphabet Inc. NASDAQ:GOOGL on its 5nm Axion ARM CPU and Microsoft Co. NASDAQ:MSFT on your Maia chip.
The bad: operator and company revenues fall 58% compared to the previous year
Excess inventories and normalization are expected to continue driving weaker industry demand. Enterprise networking revenue fell 58% year over year and 42% sequentially to $153.1 million. Carrier revenues fell 75% year-over-year and 58% sequentially to $71.8 million, well below Marvell’s forecast for declines of 40% and 50%, respectively. However, the company expects a recovery to begin in the second half of fiscal 2025 as customers work on inventory correction.
The Ugly: Consumer segment revenues fall 70% compared to the previous year
Consumer segment revenue fell 70% year-over-year to $42 million, in line with previous guidance. However, the company expects consumer segment revenues to double sequentially. The automotive and industrial segment saw a 13% year-over-year decline to $77.6 million due to widespread inventory correction in the automotive end market. Growth is expected to resume after a stable second quarter of fiscal 2025.
MRVL Sinks in a Descending Triangle Splitting Pattern
The daily candlestick chart on MRVL illustrates a descending triangle breakout pattern. The descending trendline formed at the swing high of $85.76 on March 7, 2024, and the ascending lower trendline formed at the swing low of $61.72 on April 22, 2024. MRVL rejected the upper trend line at $78.44 and collapsed through the lower trend line on its earnings release with shares falling to $66.10. The daily relative strength index (RSI) has dropped to band 45 and is poised to bounce and retest the lower trend line or continue its next leg down. Pullback support levels are at $66.10, $61.72, $55.63 and $50.35.
Robust growth hampered by a ball and chain.
Marvel reported fiscal Q1 2025 EPS of 24 cents, matching consensus estimates. Revenues fell 12.2% year-over-year to $1.16 billion, beating consensus estimates of $1.15 billion.
Marvel provides conservative fiscal guidance in line for the second quarter of 2025.
Marvell took a conservative approach due to its declining segments and provided in-line guidance for fiscal second-quarter 2022 earnings per share of 24 cents to 34 cents versus consensus estimates of 28 cents. Revenues are expected between $1.1875 billion and $1.3125 billion, versus consensus estimates of $1.22 billion. Non-GAAP gross margins are expected to be around 62%. Non-GAAP operating expenses are expected to be approximately $455 million.
Marvell Technology CEO Matt Murphy commented: “For the second quarter of fiscal 2025, we are guiding for an 8% sequential increase in revenue at the midpoint, fueled by the rise of custom AI silicon. We see a favorable setup for the second half of this fiscal year, driven by continued growth in data centers and the start of a recovery in enterprise networks and carrier infrastructure.”
Marvell Technology Analyst Ratings and Price Targets are on MarketBeat.
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