Marvell Technology experienced a significant decline of over 18% in its stock price when the semiconductor company disclosed guidance that did not meet the elevated expectations of some investors. For the upcoming fiscal first quarter, Marvell projects sales of approximately $1.88 billion, slightly exceeding the $1.87 billion anticipated by analysts surveyed by LSEG. However, this forecast disappointed market expectations, which were closer to $2 billion, particularly following a robust 83% stock surge in 2024.
Investors are increasingly scrutinizing Marvell’s collaboration with Amazon Web Services regarding its Trainium AI chip. Concerns arise over potential limitations in Marvell’s market for custom application-specific integrated circuits (ASICs). Barclays analyst Tim Donovan expressed that while the company’s current figures are positive, they fall short of the heightened benchmarks set by the broader Amazon supply chain. He noted, “While the company continues to express confidence in the future of their ASIC prospects, the near-term Amazon numbers appear inadequate, which is critical in a market punishing anything short of perfection in AI.”
Marvell is renowned for its development of specialized chips and hardware utilized in data centers, networking, and infrastructure. Despite the surge from the artificial intelligence wave benefiting various chipmakers, the sector now faces heightened performance expectations.
In its fourth-quarter results, Marvell announced adjusted earnings per share of 60 cents and total revenue of $1.82 billion. Both figures surpassed the earnings forecast of 59 cents per share and a revenue prediction of $1.80 billion, according to LSEG data. Revenue from data centers hit $1.37 billion, slightly above the $1.36 billion consensus estimate.
The drop in Marvell’s stock rippled through the semiconductor industry, with the VanEck Semiconductor ETF declining by about 4%. Other major players, including Nvidia and Broadcom, saw their stock prices fall more than 5%, while Taiwan Semiconductor experienced a nearly 4% reduction.
As the market continues to react to shifting expectations, investors remain vigilant regarding the future trajectory of Marvell and its position in an increasingly competitive landscape.
