Marvell Technology forecast first-quarter revenue in line with Wall Street estimates on Wednesday, but its shares plunged 15 per cent in extended trading as it failed to excite investors who expected sharper artificial intelligence-driven growth.
The demand and resulting shortage of AI chips have driven up the prices of Nvidia’s AI processors. As a result, tech giants such as Microsoft, Meta Platforms, and Amazon.com, are reducing their reliance on Nvidia by developing their own AI processors.
This strategic shift has also benefited other chipmakers such as Marvell and Broadcom.
“The earnings print was generally ok, but I believe investors were expecting more given all the bullish data points in the overall AI space and the ramp of custom ASICs (AI chips) with certain hyperscalers,” said Tore Svanberg, an analyst at brokerage Stifel Nicolaus and Co.
Marvell’s data center segment revenue grew 78 per cent in the fourth quarter from a year earlier to $1.37 billion, boosted by a surge in demand for custom AI chips from businesses looking to optimize their AI workloads.
Marvell reiterated that it will focus its investments on data centers, compared to other end markets, to “fully capitalize” on the AI boom. Data center revenues accounted for 75 per cent of its overall quarterly revenues.
Marvell’s shares had risen over 83 per cent in 2024, while larger competitor Broadcom’s stock had jumped about 107 per cent. But the chipmaker’s stock was trading at $77.65 in extended hours on Wednesday.
“Shares are down sharply despite the good results, with some likely concerned about the magnitude of the beat, geopolitical pressures, and broader concerns about AI monetization,” Angelo Zino, an equity analyst at CFRA Research.
The company forecast first-quarter revenue to be $1.88 billion, compared with analysts’ average estimate of $1.87 billion, according to data compiled by LSEG.
