Benchmark Reiterates Buy Rating on Marvell (MRVL)

Benchmark analyst Cody Acree reiterated a Buy rating and $95.00 price target on Marvell (NASDAQ: MRVL).

The analyst commented, "Marvell’s shares fell by more than 11% after-hours as investors grappled with the second consecutive quarter of disappointing results and guidance, as the company is seeing near-term inventory digestion at what we expect is its lead custom-silicon hyperscale customer, Amazon. The customer’s efforts to more fully utilize product volumes that Marvell has now shipped over the past three quarters is expected to take about 45-60 days to complete, with the CSP expected to return to volume deliveries in the fourth quarter. This inventory absorption is then expected to result in a sequential Q3 decline in its Custom Compute business, offset by continued growth in its Electro-Optics business, which equates to Marvell’s guidance for a flat sequential Data Center performance in the October period. We note that even with this temporary Data Center pause, the company is still delivering strong annual numbers, with its Data Center business up 69% Y/Y in the July period and even flat sequentially still equates to a 35% anticipated annual growth in Q3. However, the last two quarters, plus its outlook, highlights a slowing momentum in its Data Center business, that we’re not fully comfortable explaining away as simple customer inventory digestion. Although we do note the firm’s sequential trends thus far into FY26 are Q1 up 5.5%, Q2 up 3.5%, and Q3 now guided flat, which follows a period of unusually strong growth through the second half of last year, when Data Center revenue grew at a mid-20% sequential pace in both Q3 and Q4, which then could account for the slower volumes to Amazon over the past few months, as the CSP works though its stockpile of pre-ordered ASICs. Still, we believe the second quarter of disappointing results versus Street expectations, opens the door ever wider for growing market speculation of a loss of Amazon’s next generation 3nm Tranium 3 design to Marvell’s Taiwanese competitor, Alchip."

For an analyst ratings summary and ratings history on Marvell click here. For more ratings news on Marvell click here.

Shares of Marvell closed at $77.23 yesterday.

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