Marvell Shares Drop 6% Despite Q2 Revenue Beat as FY28 Outlook Falls Short of Expectations
Quick Look
- Marvell Technology shares fell 6% on Friday despite beating second-quarter revenue estimates, as its raised fiscal 2028 revenue outlook of ~$18 billion failed to meet elevated investor expectations.
- The chipmaker cited strong AI-related demand and a Google partnership allowing purchase of up to 58.97 million shares at $206.58 each through fiscal 2033, but offered limited detail on the long-term forecast, dampening sentiment.
- Goldman Sachs noted high investor expectations ahead of the quarter and remains neutral on the stock due to valuation premiums and uncertainty about adding custom-chip customers.
AI-generated summary
Why It Matters
Marvell Technology designs semiconductors for data centers, networking, and AI infrastructure. Its stock has risen significantly this year due to AI-driven demand. The company recently disclosed a partnership allowing Google to purchase up to 58.97 million shares at a set price through 2033, tied to TPU-compatible products.
Marvell Technology shares fell 6% on Friday despite a second-quarter revenue beat, as its raised fiscal 2028 outlook failed to meet investors' elevated expectations.
The chipmaker said Thursday that it now expects revenue to grow about 50% year-on-year to around $18 billion, higher than its previous forecast of $16.5 billion.
Revenue rose 37% to $2.7 billion in its fiscal second quarter. That came in $39 million above the company guidance provided in May.
Marvell, which makes networking, connectivity and custom chips used in AI data centers, offered limited detail on its fiscal 2028 outlook, dampening investor sentiment after hopes that a Google partnership worth up to $12.2 billion in shares would further boost earnings.
The stock was last trading down 6.6%. It's up 184% this year, buoyed by demand for its products used in AI infrastructure.
Marvell's Chairman and CEO Matt Murphy said the results were driven by continued strong demand across the company's data center portfolio, where revenue growth accelerated to 46% year over year.
"AI-related bookings remain exceptionally robust, and we expect our revenue growth to accelerate further through the remainder of fiscal 2027," Murphy added.
The Google partnership, announced last week, allows the tech giant to buy up to 58.97 million Marvell shares at $206.58 each, subject to purchase targets through fiscal 2033.
Marvell said the agreement covers products that work with Google's TPU systems, including AI inference chips, storage controllers and network interface controllers.
Goldman Sachs analysts noted "high investor expectations" ahead of the quarter.
"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," the analysts said in a Thursday note.
The results were an "incremental positive" for the stock, they added. Goldman Sachs remains neutral on Marvell as the investment bank noted that it trades at a higher valuation than its peers and there is less certainty about its ability to add custom-chip customers.
What to Watch
AI outlook — possibilities, not facts
Marvell will provide more detailed fiscal 2028 outlook guidance in its next earnings call.
Likely · Within weeks
Open Questions
- What specific products are included in the Google partnership beyond TPU systems?
- How will Marvell diversify its customer base beyond current AI infrastructure clients?
- What factors contribute to the uncertainty about adding custom-chip customers noted by analysts?
